At December 31, 2020, Platinum Corp. has the following equity securities (no significant influence) that were purchased earlier in 2020, its first year of operation: $\begin{array}{c}
\begin{array}{lll}
\
\text {Security A}\
\quad\quad\quad\quad\text {B}\
\text {Totals}\
\end{array}
\begin{array}{l}
\underline{\text { Cost }}\
\$ 50,000 \
\underline{70,000}\
\underline{{\$ 120,000}}
\end{array}
\begin{array}{c}
\underline{\text { Market } }\
\$ 51,875 \
\underline{77,500}\
\underline{\$ 129,375}
\end{array}
\end{array}$
If the investments are being accounted for under the fair value through net income (FV-NI) model, the total book value of the investment accounts should

Question

At December 31, 2020, Platinum Corp. has the following equity securities (no significant influence) that were purchased earlier in 2020, its first year of operation: $\begin{array}{c}
\begin{array}{lll}
\
\text {Security A}\
\quad\quad\quad\quad\text {B}\
\text {Totals}\
\end{array}
\begin{array}{l}
\underline{\text { Cost }}\
\$ 50,000 \
\underline{70,000}\
\underline{{\$ 120,000}} 
\end{array}
\begin{array}{c}
\underline{\text { Market } }\
\$ 51,875 \
\underline{77,500}\
\underline{\$ 129,375} 
\end{array}
\end{array}$
 If the investments are being accounted for under the fair value through net income (FV-NI) model, the total book value of the investment accounts should

Quizplus · Accepted Answer

Under the fair value through net income (FV-NI) model, investments are adjusted to their fair market value at each reporting date, with changes in fair value recognized in net income. Since the market value of the investments increased from $120,000 to $129,375, the book value of the investments should be increased by the difference, which is $9,375.

At December 31, 2020, Platinum Corp If the Investments Are Being Accounted for Under the Fair