Morley Manufacturing Has Notes Receivable That Have a Fair Value

question 7

Multiple Choice

Morley Manufacturing has notes receivable that have a fair value of €810,000 and a carrying amount of €620,000. Morley decides on December 31, 2019, to use the fair value option for these recently-acquired receivables. Which of the following statements is correct regarding the election of the fair value option by Morley?

• A) Morley can elect to use the fair value option or amortized cost for these notes at each statement of financial position date.
• B) Morley reports the receivables at fair value, with any unrealized holding gains and losses reported as a separate component of comprehensive income.
• C) The unrealized holding gain is the difference between the fair value and the carrying amount.
• D) All of the choices are correct regarding the fair value option.

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