Smith Buys and Sells Securities Which It Typically Classifies as Available

question 117

Multiple Choice

Smith buys and sells securities which it typically classifies as available for sale. On December 15, 2009, Smith purchased $500,000 of Jones shares, and elected the fair value option to account for the Jones investment. As of December 31, 2009, the Jones shares had a fair value of $525,000. In the 2009 financial statements, Smith will show (ignore taxes) :

• A)investment income of $25,000 on their income statement.
• B)other comprehensive income of $25,000.
• C)accumulated other comprehensive income of $525,000.
• D)an investment in Jones of $500,000.

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Definitions:

Organizational Criteria

Standards or principles used to evaluate and make decisions within a business or institution.

Financial Incentives

Monetary rewards offered to influence the behavior, performance, or decision-making of individuals or organizations.

Salespeople

Individuals responsible for selling products or services to customers, often working on commissions.

Straight Piecework

A compensation system where workers are paid a fixed rate for each unit produced or action performed, regardless of time.