Under the Fair Value Option, an Investment in the Common

question 41

Multiple Choice

Under the fair value option, an investment in the common stock of another entity will be

• A) Reported as a current asset
• B) Reported as a noncurrent asset
• C) Reported as either a current or noncurrent asset depending on managerial intent.
• D) Reported as a current asset only if it was not previously reported as an equity method investment.

---

Definitions:

Negotiable Instrument

A document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payee’s name written on the document.

Negotiability

The characteristic of a financial instrument that allows it to be transferred or assigned from one party to another, facilitating commerce and trade.

Electronic Deposit

The transfer of funds directly into a bank account, eliminating the need for physical checks.

Certificate of Deposit

A savings certificate with a fixed maturity date and specified fixed interest rate that is issued by a bank.