The following information was extracted from the December 31, 2011, current asset section of the balance sheets of four different companies:
There were no transaction in short-term equity securities during 2012, and as of December 31, 2012, the controllers of each company collected the following information:
a. Compute the change in the wealth levels of each of the four companies due to the market value changes in their equity investment.
b. Compute the effect on 2012 reported income for each of the four companies due to the market value changes in their equity investments.
c. Explain why the answers to (a) and (b) are not the same.
d. How would 2012 reported income change for each company if each chose to use the fair market value option for the available-for-salesecurities?