Account For Equity And Debt Investments Practice Test

A for-profit entity (Lark Co.) purchased 30,000 shares (3% ownership) of a publicly traded company for $900,000 on December 15, 20X4. Lark has no board representation, does not participate in policy-making, and intends to hold the shares for price appreciation; the shares are quoted on an active exchange and Lark prepares 20X4 financial statements under FASB ASC. Under ASC 321, what is the appropriate classification for this equity investment?

A for-profit entity (Quartz Inc.) holds an equity security accounted for under ASC 321 that is not quoted on an exchange. On December 31, 20X4, Quartz estimates fair value using a valuation model primarily based on unobservable inputs (projected cash flows and a company-specific discount rate), and there are no recent observable transactions for identical or similar securities. Under ASC 820, which fair value measurement technique/input level should be used?