Morse Company Often Invests in the Stock of Other Companies

question 95

Multiple Choice

Morse Company often invests in the stock of other companies for long-term purposes.None of the stocks currently held by Morse qualify for use of the equity method.The following amounts relate to Morse's long-term portfolio of marketable equity securities. $$\begin{array} { l c r } & \text { Dec. } 31,2009 & \text { Dec. 31, 2010 } \\\text { Tatal cost } & \$ 280,000 & \$ 330,000 \\\text { Tatal market } & 230,000 & 292,000\end{array}$$ Based on the above information,the adjusting entry on December 31,2010 is:

• A)\(\begin{array}{llr}
• \text { Allowance to Adjust Long Term Investment to Market } &38,000 \\
• \text { Unrealized Loss on Long-Term Investments } &&38,000\\
• \end{array}\)
• B)\(\begin{array}{llr}
• \text { Allowance to Adjust Long Term Investment to Market } &12,000\\
• \text {Unrealized Loss on Long-Term Investments } &&12,000\\
• \end{array}\)
• C)\(\begin{array}{llr}
• \text { Unrealized Loss on Long-Term Investments } &38,000\\
• \text {Allowance to Adjust Long Term Investment to Market } &&38,000\\
• \end{array}\)
• D)\(\begin{array}{llr}
• \text { Unrealized Loss on Long-Term Investments} &12,000\\
• \text { Allowance to Adjust Long Term Investment to Market} &&12,000\\
• \end{array}\)

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Definitions:

Assimilation

The process by which an individual or group adopts the cultural traits or social patterns of another group, often losing original identity characteristics.

Cultural Values

The shared beliefs and norms within a culture that influence behaviors, decisions, and interactions among its members.

Acquired Company

A company that has been purchased by another entity, often resulting in changes in management, operations, or strategy.

Organizational Culture

The set of shared attitudes, values, goals, and practices that characterizes an institution or organization.