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The Fair Value Adjustment account


The Fair Value Adjustment account 1. Short-term stock investments should be valued on the balance sheet at a. the lower of cost or fair value. b. the higher of cost or fair value. c. cost. d. fair value. 2. In recognizing a decline in the fair value of short-term stock investments, an unrealized loss account is debited because a. management intends to realize this loss in the near future. b. the securities have not been sold. c. the stock market is volatile. d. management cannot determine the exact amount of the loss in value. 3. The Fair Value Adjustment account a. is set up for each security in the company’s portfolio. b. relates to the entire portfolio of securities held by the company. c. is closed at the end of each accounting period. d. appears on the income statement as Other Expenses and Losses. 4. The contra-account, Fair Value Adjustment, is also called a(n) a. offset account. b. adjustment account. c. valuation account. d. opposite account. 5. Reporting investments at fair value is a. applicable to stock securities only. b. applicable to debt securities only. c. applicable to both debt and stock securities. d. a conservative approach because only losses are recognized. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help


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