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allochka39001 [22]
3 years ago
5

On March 25, 2021, Phillips Corporation purchased bonds of Atlas Corporation for $132 million and classified the securities as t

rading securities. On December 31, 2021, these bonds were valued at $150 million. Three months later, on April 3, 2022, Phillips Corporation sold these bonds for $140 million. As part of the multi-step approach to record the 2019 transaction, Phillips Corporation should first update the fair value adjustment by recording:
Multiple Choice

An unrealized holding gain of $28 million in 2019.

A unrealized holding loss of $10 million in 2019.

An unrealized holding gain of $8 million in 2019.

A gain of $8 million in 2019.
Business
1 answer:
ValentinkaMS [17]3 years ago
4 0

Answer:

An unrealized holding gain of $28 million in 2019.

Explanation:

At the financial year-end, the company have to reevaluate the investment to recognize the gain or loss.  

If the fair value is higher than actual investment, the company gain and vice versa it lost.

In this scenario, the fair value adjustment = the valuation on 31st December – purchased value = $150 million - $132 million = $28 million.

Because this step is just an approach to record new valuation of investment, then it’s consider unrealized.

In short, Phillips Corporation should first update the fair value adjustment of $28 million on December 31 2021

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The Service Quality Gap refers to the difference between what a company understands a customer's desires and what must be really done to satisfy that consumer. Firms should make all the efforts in their hands to close that breach and provide the customer with the good or service they need to keep their businesses going. When the gap is not closed, the customer's loyalty fails, pushing them to look for different options in other organizations.

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The correct answer is letter "B": That is useful in decision making.

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