Presented below is information related to the purchases of common stock by Lilly Company during 2020.

Instructions

(Assume a zero balance for any Fair Value Adjustment account.)

a. What entry would Lilly make at December 31, 2020, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option?

b. What entry(ies) would Lilly make at December 31, 2020, to record the investments in the Lee and Woods corporations, assuming that Lilly did not select the fair value option for these investments?

Transcribed Image Text:

Fair Value Cost (at purchase date) (at December 31) $ 80,000 300,000 Investment in Arroyo Company stock Investment in Lee Corporation stock Investment in Woods Inc. stock Total $100,000 250,000 180,000 190,000 $570,000 $530,000