Which of the Following Is/aretrue Regarding the Fair Value Option

question 111

Multiple Choice

Which of the following is/aretrue regarding the fair value option for marketable securities and derivatives?

• A)Subsequent to the acquisition of a derivative, the firm may report changes in fair value of derivatives in Other Comprehensive Income.
• B)Subsequent to the acquisition of a derivative, the firm may report changes in fair value of derivatives, but they have no effect on any lines of the statement of cash flows.
• C)Firms using the fair value option mark the carrying value of the asset to fair value each period.
• D)If the change in fair value of the derivative decreases carrying value, then the firm reports the amount of that decrease as a loss during the current period.
• E)all of the above

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Definitions:

Conservation

In cognitive psychology, the understanding that objects conserve properties such as number, length, and volume despite changes in the form or appearance of those objects.

Egocentrism

A mental characteristic where a person cannot comprehend or adopt viewpoints other than their own.

Anxious and Inhibited Temperament

A temperament characterized by a predisposition towards anxiety, fearfulness, and shyness, particularly in unfamiliar situations.

Heart Rates

The quantity of heart pulses within a given time frame, usually measured in beats per minute (BPM).