Asked by Bobby Ramoz on Jul 15, 2024
Verified
Temporary investments such as in trading securities are
A) recorded at cost but reported at fair value
B) recorded at cost and reported at cost
C) recorded at cost but reported at lower of cost or fair value
D) recorded at fair value and reported at fair value
Trading Securities
Financial instruments that are purchased and held primarily for sale in the near term to generate income on short-term price differences.
Fair Value
The estimated price at which an asset or liability could be traded in an orderly transaction between market participants at the measurement date.
- Grasp the concept of fair value accounting and its application to investment securities.
Verified Answer
KM
Kaira MarinezJul 20, 2024
Final Answer :
A
Explanation :
Temporary investments such as in trading securities are recorded at cost initially but are subsequently reported at fair value, reflecting their current market value. This approach ensures that the financial statements present the most relevant and up-to-date information regarding the value of these investments.
Learning Objectives
- Grasp the concept of fair value accounting and its application to investment securities.