Question

, Fair Value and Equity Methods Conceptual Questions

1. What are the two fair value methods to account for investments?

2. What type of security can be accounted for under both methods?

3. What type of security can be accounted for under only one of these methods? Which method is that?

4. Complete the following table for Investments: Fair value method(s) Other Method Investment in Bonds 2 methods: Held to Maturity – Amortized Cost Investments in Stocks 1 method:

YES PLS ANSWER THW FIRST FOUR PLS

Answer 1

1. The two fair value methods to accounts for investment is 1st is Cost method that is accounted at historical cost and 2nd is equity method which is used only when investor have significant influence over investee.

2. The type of security can be accounted under cost method is stock and under equity method is shares which include both common and preferred stock.

3. The type of security which can be accounted for under only one of these methods is cost method we use cost method when we make passive but long term investment in another company. Stock is recorded at balance sheet as a non current asset at historical purchase price therefore cost method provide fair view presentation in the financial statement than equity method.

4. please provide the table as it is not given in question.