Asked by Ashley Kenny on May 02, 2024

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The fair value method of accounting for investments was proposed to overcome which issues associated with the prior use of lower of cost or market?

A) reliability and liquidity
B) relevance and liquidity
C) reliability and financial flexibility
D) relevance and financial flexibility

Lower Of Cost

An accounting method that values inventory at the lower of its historical cost or market value to report losses in value.

Financial Flexibility

Financial flexibility denotes an organization's ability to react to unexpected expenses and investment opportunities without jeopardizing its financial stability.

  • Gain insight into the principle and division of investment securities, specifically available-for-sale, held-to-maturity, and trading types.
  • Comprehend the impact that variations in market value have on the accounting and reporting processes of available-for-sale securities.
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ZK
Zybrea KnightMay 06, 2024
Final Answer :
B
Explanation :
The fair value method was proposed to address issues of relevance and liquidity. It provides more timely information about the current value of investments, making financial statements more relevant to users and reflecting the liquidity of the investments more accurately.