If a Company Elects the Fair Value Option to Account

question 103

Multiple Choice

If a company elects the fair value option to account for equity securities, what will be recorded differently when there is no significant influence?

• A) Unrealized Gains and Losses will now be reported as part of Net Income instead of Other Comprehensive Income.
• B) Dividends received from the investee will now be credited to Dividend Revenue instead of as a reduction to the investment account.
• C) A proportionate share of net income will no longer need to be recorded for these equity securities.
• D) There is no difference in accounting for equity securities with no significant influence as these are already accounted for using the fair value method.

---

Definitions:

Place Theory

A proposal about pitch perception stating that regions of the basilar membrane respond to particular sound frequencies, and the nervous system interprets the excitation from different basilar regions as different pitches.

Oval Window

A membrane-covered opening that leads from the middle ear to the cochlea of the inner ear, playing a crucial role in the process of hearing.

Cochlea

A spiral-shaped, fluid-filled inner ear structure that is essential for converting sound waves into electrical signals that can be interpreted by the brain as sound.

Waves

are disturbances or variations that travel through a medium, such as air, water, or vacuum, transferring energy from one point to another without permanent displacement of the particles of the medium.