The Fair Value Option Cannot Be Elected for Significant-Influence Investments

question 179

True/False

The fair value option cannot be elected for significant-influence investments because those must be accounted for under the equity method.

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Definitions:

Fair Value Increments

Increases in the value of an asset to reflect its current market price rather than its book value or purchase price.

Entity Method

A method of consolidation that treats all companies involved as a single, unified entity for financial reporting purposes.

Dividends Declared

A formal announcement by a company's board of directors to distribute a portion of the company’s earnings to shareholders.

Dividend Income

Income earned by investors from receiving dividends, which are distributed portions of a company's profit.