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Taylor Company made a long-term investment in 100,000 shares of Summit Company at $50 per share. This investment represented less than 1% of the outstanding shares of Summit. By yearend, the share price climbed to $75 per share for an appreciation of $2,500,000. Near the end of the year, the CEO, Bud Greene approached the CFO, Sasha Whitman, wishing to recognize the $2.5 million appreciation as a gain on the income statement. The CEO reasoned that the fair value of the Summit investment should be disclosed on the balance sheet with the associated appreciation in share price recognized on the income statement. How should Sasha respond to the CEO's assertion?

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Category:- Corporate Finance
Reference No.:- M91574625

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