Finnegan's Financial is a small investment boutique that manages money for several wealthy individuals.They pool the funds of the clients and use that to invest in various stocks and bonds.They recently purchased 12,000 common shares, or 4% of the outstanding total, of Flannigan Ltd.to hold in their investment accounts.For accounting purposes how should Finnegan's investment in Flannigan Ltd.be treated?

Question

Quizplus · Accepted Answer

Since Finnegan's Financial holds less than 20% of Flannigan Ltd.'s shares, they do not have significant influence. Therefore, the investment should be classified as Fair Value Through Profit or Loss (FVTPL).

Finnegan's Financial Is a Small Investment Boutique That Manages Money