Question

Related to accounting for marketable securities, the accounting under the fair value election is similar to...

Related to accounting for marketable securities, the accounting under the fair value election is similar to that for which of the following portfolios (be sure to consider both the balance sheet and income statement impact)?

A.

Trading portfolio
B.

Available-for-sale portfolio
C.

Hold-to-maturity Portfolio
D.

Both A and B
E.

None of the above
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Answer #1

Trading Portfolio and Available for Sale portfolio both requires determination of fair value at the end of accounting period. At the end of accounting period unrealized gain or loss is calculated and the securities are reported at fair value in the balance sheet.

Hold to maturity portfolio is applicable only for debt portfolio and fair value is not determined, The securities are reported in the balance sheet based on cost and amortization of premium or discount.

D. Both A and B

D.

Both A and B
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