Question: Assume the same facts as for Question 1 above. The fair value of the investment in Company E is $220,000 on December 31, 2011. Answer

Assume the same facts as for Question 1 above. The fair value of the investment in Company E is $220,000 on December 31, 2011. Answer the following questions assuming the investment is recorded using the fair value option:
a. What is Company R’s investment income for 2011?
b. What is Company R’s investment balance on December 31, 2011?
c. Explain in words the investment balance on December 31, 2011.

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