Question

Smith buys and sells securities. On December 15, 2018, Smith purchased $548,000 of Jones shares and elected the fair value option to account for the Jones investment. As of December 31, 2018, the Jones shares had a fair value of $594,000. In the 2018 financial statements, Smith will report (ignore taxes):

Answer 1

Answer:

Investment income of $46,000 in its income statement

Explanation:

Calculation for the amount that Smith will report in the 2018 financial statements,

Investment income =Fair value of $594,000-Purchased $548,000

Investment income =$46,000

Therefore Smith will report investment income of $46000 in its 2018 financial statements,