Answered: The market value option (fair value…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mf2.

-The market value option (fair value option)

a. Does not apply to investments in bonds classified as available for sale

b. Does not apply to investments in bonds classified as hold until maturity. expiration

c. Does not apply to investments in common shares accounted for using the equity method

d. The three previous alternatives are incorrect..

-Which of these changes in the method of accounting for investments in common stock requires a retroactive adjustment to the balance of the investment?

a. Change from “fair value through net income” to “equity method”

b. Change from “equity method” to “fair value through net income”

c. Both "a" and "b" are correct.

d. Neither "a" nor "b" are correct

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