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

question 58

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 intends to sell the investment:

• A) The investment is not written down to fair value.
• 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 the entire 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:

Education

The process of receiving or giving systematic instruction, especially at a school or university.

Enjoyment

Enjoyment refers to the state or feeling of taking pleasure in something.

Linear

Describes a relationship or function that forms a straight line when graphed, denoting a constant rate of change between two variables.

Variables

Represent characteristics or quantities that can change and have different values for different individuals or objects in a study.