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

question 139

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 a special "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:

Electrons

Subatomic particles with a negative charge, found orbiting the nucleus of an atom, involved in chemical bonds and electrical conductivity.

Enthalpy

A thermodynamic quantity equivalent to the total heat content of a system, representing the amount of energy needed to create a system plus the work needed to make room for it in its environment.

Free Energy

A thermodynamic quantity that represents the amount of work that can be performed by a system at a constant temperature and pressure.

Entropy

Disorderliness; a quantitative measure of the amount of the random, disordered energy that is unavailable to do work.