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:

Unit Price

The cost per unit of volume or weight of a product, allowing for easier comparison of costs between different sized packages of the same item.

Marginal Revenue Curve

A graphical representation that shows how the revenue changes when additional units are sold, illustrating the relationship between quantity sold and revenue.

Purely Competitive Firm

An entity operating in a market that features a high level of competition and no significant barriers to entry, leading to no single firm influencing market prices.

Market Price

The existing selling or buying price for an asset or service in the specified market.