The Primary Difference in Accounting for Available-For-Sale Investments in Stock

question 111

Multiple Choice

The primary difference in accounting for available-for-sale investments in stock and accounting for trading investments in stock is which of the following?

• A)Measuring the fair value of the long-term and short-term investment portfolios on the balance sheet.
• B)Determination of the acquisition cost.
• C)Reporting of the unrealized holding gain or loss on investments within the financial statements.
• D)Determination of the unrealized holding gain or loss.

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Definitions:

Breach of Warranty

The failure to fulfill the terms of a promise or assurance, typically related to the quality or condition of a sold product or service.

Material Defects

Significant problems in a property or product that affect its value, functionality, or safety, which are typically undisclosed to a buyer.

Specific Performance

A judicial remedy requiring a party to fulfill their obligations under a contract, typically used when monetary damages are insufficient.

Reasonable Market Value

An estimate of the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.