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 assets?

• A)A company can elect the fair value option at any point in the assets life,but can not 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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Definitions:

Projection

A psychological defense mechanism where individuals attribute their own unwanted feelings or desires to others.

Defense Mechanism

Mental techniques employed by people to deal with reality and preserve their sense of self.

Rationalization

Denotes a defense mechanism in which controversial behaviors or feelings are justified and explained in a seemingly rational or logical manner to avoid the true explanation.

Hostility

Aggressive behavior or attitudes towards others, often stemming from anger or resentment.