In January 2017, Haddock Ltd.had purchased an investment for $150,000.By December 31, 2017, the fair market value of that investment had increased by $20,000.Assuming this gain was included in the company's 2017 net income, which accounting method did Haddock use to account for this investment?
A)cost
B)fair value through other comprehensive income (FV-OCI)
C)fair value through net income (FV-NI)
D)equity

Question

Quizplus · Accepted Answer

If the gain on the investment was included in the company's net income for the year, then Haddock Ltd must have used the fair value through net income (FV-NI) accounting method. This method requires that changes in fair value are recognized directly in net income for the period.