On February 19, 2012, Jose Inc. acquired 18,000 shares of Luis Corporation stock at $45 per share. Jose has 50,000 shares outstanding. On December 31, 2012, Luis common stock had a closing market price of $26 per share. Assuming that the decline in market price is considered to be temporary, at December 31, Luis would
A) Make an adjusting entry, including a debit to Unrealized Loss on Equity Method Securities of $342,000
B) Make an adjusting entry, including a credit to Market Adjustment on Equity Method Securities of $468,000
C) Make an adjusting entry, including a credit to Investment in Luis Stock of $342,000
D) Do nothing; an adjusting entry is not required
Correct Answer:
Verified
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