When Must a Company Generally Elect the Fair Value Option

question 110

Multiple Choice

When must a company generally elect the fair value option for reporting financial assets?

• A) A company can elect the fair value option at any point in the asset's life, but cannot then revert back to accounting for those assets at cost.
• B) A company must typically elect the fair value option at acquisition.
• C) A company can typically choose the cost or fair value for each asset each year at the balance sheet date.
• D) Companies may not account for assets at fair value. GAAP requires these be recorded at cost.

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