Nichols Enterprises has an investment in 30,500 shares of Ellott Electronics tha

Question

Nichols Enterprises has an investment in 30,500 shares of Ellott Electronics that Nichols accounts for as a security avallable for sale. Ellott shares are publicly traded on the New York Stock Exchange, and The Wall Street Journal quotes a price for those shares of $16 a share, but Nichols belleves the market has not appreciated the full value of the Ellott shares and that a more accurate price Is $18 a share. Nichols should carry the Ellott investment on Its balance sheet at O $518,500, the midpoint of Nichols's range of reasonably likely valuations of Elliott. O $549,000 O $488,000 O Either $488,000 or $549,000, as either are defensible valuations MacBook Air FI : F2 F3 F4 FS F6

Explanation / Answer

Answer is $ 488,000

The explanation is as follows:

The Investment held for sale is valued at the eyar end at the price at which it can be sold immediately or cost of investment, whichever is less. Therefore, the investment shoul;d be valued at a price @ 16 per share and valuation of investment is $ 488,000 (30,500 shares @ 16 per share)

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