The Purpose of the Fair Value Adjustment for Securities Classified

question 30

Multiple Choice

The purpose of the fair value adjustment for securities classified as "available-for-sale" is:

• A)To adjust the valuation of a company's investment to current market value.
• B)To recognize the proper amount of gain or loss on fluctuations in the market value of these securities in the current period income statement.
• C)To adjust a corporation's capital stock account to reflect the current market value of the outstanding capital stock.
• D)To compute the amount of taxes payable on unrealized gains and losses.

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Definitions:

Inequality

A mathematical statement that indicates one quantity is larger or smaller than another, not equal.

Solve

To find an answer or solution to a problem, equation, or puzzle.

Grocer

A person or business that sells food and other household goods.

Satisfies

When a mathematical statement or condition holds true or when an argument meets certain criteria or standards.