Muir, Ltd Measures Its Trading Securities at Fair Value

question 126

Multiple Choice

Muir, Ltd. measures its trading securities at fair value. It has liabilities that it also measures using the fair value option. Muir has bonds outstanding (originally sold for $4,320,000) in the face amount of $3,600,000 with a current bond premium of $612,000. The bonds were selling at 101 on the market at its year end. If the company elects the fair value option for these bonds, at what value should it report for these bonds on its balance sheet at year end?

• A) $3,636,000
• B) $3,960,000
• C) $4,212,000
• D) $4,320,000

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Definitions:

Normal Distribution

A bell-shaped curve symmetrical about its mean, representing a distribution where most occurrences take place in the middle of the range and fewer occur as one moves away from the center.

Null Hypothesis

A hypothesis that states there is no statistical significance between the two specified populations, and any observed difference is due to sampling or experimental error.

Multinomial Population

A population in statistics that can fall into more than two categories.

Z Test

A statistical test used to determine if there is a significant difference between the mean of a sample and the mean of a population.