In 2017, Reckless Investments purchased 2% of the outstanding shares of common stock of Zoop Corp. The following table describes Reckless's cost basis and the market value of its holdings:

	Market value
Cost	12/31/2018	12/31/2019
$500	$400	$550

In 2019, Zoop Corp reported net income of $2500 and did not declare or pay dividends on its common stock.

Record the journal entries for the change in the carrying value of Reckless's investment Zoop Corp. Select all that apply.

1. Cr. Unrealized gain (income statement) -- $150
2. Cr. Unrealized gain (other comprehensive income) -- $150
3. Dr. Fair Value Adjustment – equity investment -- $150
4. Cr. Unrealized gain (other comprehensive income) -- $50
5. Dr. Fair Value Adjustment – equity investment -- $50
6. Cr. Unrealized gain (income statement) -- $50

Answer rating: 100% (QA)

Since the equity instrument is of Reckless Investments is only 2 of Zoop Corp then it is accou... View the full answer