Question: As president of a young technology company you and your
As president of a young technology company, you and your chief financial officer are discussing your great success in investing in other high-growth companies in your industry. When you raised $20 million in capital, you actually needed $10 million immediately so you invested the other $10 million in a portfolio of dynamic companies that you accounted for as available-for-sale securities. Over the last year, the value of these companies doubled. How will next year’s reported income compare with this year’s if you liquidate that portfolio and invest it in the core business?
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