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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Describe the fair value method of accounting for investments. Under which circumstances should it be used?

To determine

The fair valuet method of accounting for investments and the circumstances when it is used.

Explanation

There are basically 3 methods of accounting for investments:

  1. Amortized Cost Method
  2. Fair value method
  3. Equity method

Fair Value method of Accounting:

is used for both debt and equity securities that are usually classified as either trading securities or available for sale securities(less than 20% common stock ownership)

Trading secu...

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