The Adjusting Entry for Investments at Fair Value Through Other

question 47

Multiple Choice

The adjusting entry for investments at fair value through other comprehensive income contains a credit to Investments for $651.The income statement will reflect:

• A) revenue of $651
• B) an extraordinary gain of $651
• C) other comprehensive income/loss of ($651)
• D) nothing, because gain/loss is not reported on the income statement

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Definitions:

Company's Liabilities

Financial obligations a company owes to outside parties, including debts, loans, and other forms of financial liabilities.

Efficient Market

A market in which prices fully reflect all available information and assets are priced accurately.

Moral Hazard

The situation where one party takes risks because they know they will not bear the full consequences of their actions, often due to asymmetric information or contracts.

Supply Curve

A visual model that illustrates the association between the pricing of goods and their supply quantity.