If the Fair Value of a Held-To-Maturity Investment Declines for a Reason

question 134

Multiple Choice

If the fair value of a held-to-maturity investment declines for a reason that is viewed as "other than temporary" because the company has incurred a credit loss on the investment:

• A) The investment is written down to fair value, and only the noncredit-loss component of the impairment loss is recognized in net income.
• B) The investment is written down to fair value, and the entire impairment loss is recognized in net income.
• C) The investment is written down to fair value, and only the credit-loss component of the impairment loss is recognized in net income.
• D) The investment is written down to fair value, but none of the impairment loss is recognized in net income.

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Definitions:

Social Responsibility

The idea that entities, both individuals and corporations, must act for the benefit of society at large.

Stakeholder Perspective

An approach to business that considers the interests and impacts of all parties with a stake in the company's operation, including employees, customers, suppliers, and the community.

Corporate Culture

The shared values, beliefs, and practices that characterize an organization and influence its employees' behavior.