Question: Park Co. uses the equity method to account for its January 1, 2010 purchase of Tun Inc.s common stock. On January 1, 2010, the fair

Park Co. uses the equity method to account for its January 1, 2010 purchase of Tun Inc.’s common stock. On January 1, 2010, the fair values of Tun’s FIFO inventory and land exceeded their carrying amounts. How do these excesses of fair values over carrying amounts affect Park’s reported equity in Tun’s 2010 earnings?

Inventory excess Land excess

a. Decrease Decrease

b. Decrease No effect

c. Increase Increase

d. Increase No effect

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