On May 15, 2017, Cream Corp. purchased 1,000 common shares of Regal Bank for $32,000, as a Fair Value through Net Income (FV–NI) equity investment. At December 31, 2017, the fair value of these shares was $30,800. The required adjusting entry to reflect this fact is
A. debit Fair value–Net Income Investment, credit Holding Gain on Investment (OCI) $30,800.
B. debit Holding Gain on Investment (OCI), credit Fair value–Net Income Investment $30,800.
C. debit Fair value–Net Income Investment, credit Investment Income $21,200.
D. debit Investment Loss, credit Fair value–Net Income Investment $1,200.
Answer:D
On May 15, 2017, Cream Corp. purchased 1,000 common shares of Regal Bank for $32,000, as a Fair Value through Net Income (FV–NI) equity investment. At December 31, 2017, the fair value of these shares was $30,800. The required adjusting entry to reflect this fact is
A. debit Fair value–Net Income Investment, credit Holding Gain on Investment (OCI) $30,800. B. debit Holding Gain on Investment (OCI), credit Fair value–Net Income Investment $30,800. C. debit Fair value–Net Income Investment, credit Investment Income $21,200. D. debit Investment Loss, credit Fair value–Net Income Investment $1,200.