On its December 31, 2011, balance sheet, Merck Co.reported its temporary investment in equity securities, under the fair value through net income model at $330,000.At December 31, 2012, the fair value of the securities was $350,000.What should Merck report on its 2012 income statement as a result of the increase in fair value of the investments in 2012?

Question

Quizplus · Accepted Answer

Under the fair value through net income model, changes in the fair value of investments are recognized in the income statement. The increase from $330,000 to $350,000 results in an unrealized gain of $20,000, which should be reported as investment income.

On Its December 31, 2011, Balance Sheet, Merck Co