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Manx Company owns one investment, purchased several years ago for $20,000. As of the end of the year two years ago, the investment had increased in value to $26,000. As of the end of the current year, the investment had decreased somewhat in value, to $24,000. Manx anticipates selling the investment in the coming year and expects to receive $28,000. Under fair value accounting, what would be the value of the investments account on the current year's December 31 balance sheet? $20,000 $26,000 $28,000 $24,000

Respuesta :

Answer:

Option (D) is correct.

Explanation:

Given that,

Purchased an investment several years ago = $20,000

Investment value increased to = $26,000 (at the end of two years)

At the end of the current year,

Investment value decreased to = $24,000

Therefore, $24,000 would be the value of the investments account on the current year's December 31 balance sheet because at the end of the current year the fair value of the past investment is $24,000.

It is known that investment is valued at fair value not on the expected receipt value. That's why current year's fair value of the investment would be included.

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