If the Fair Value of a Trading Security Declines for a Reason

question 136

Multiple Choice

If the fair value of a trading security declines for a reason that is viewed as "other than temporary":

• A) The investment is not written down to fair value.
• B) The investment is written down to fair value, and an "impairment loss" is recognized in net income.
• C) The investment is written down to fair value, and the impairment loss is recognized in accumulated other comprehensive income.
• D) The investment is treated the same way it would be treated if the decline in fair value was viewed as temporary.

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Definitions:

Nondirectional Correlation

A type of correlation that indicates a statistical relationship between two variables without specifying whether the relationship is positive or negative.

Negative Correlation

A connection between two variables where as one variable rises, the other falls.

Direct Correlation

A relationship between two variables where they move in the same direction.

Nondirectional Correlation

A type of correlation where the direction (positive or negative) of the relationship between variables is not specified.