Question

Temporary investments such as in trading securities are a.recorded at fair market value and reported at fair market value b.recorded at cost but reported at fair market value c.recorded at cost and reported at cost d.recorded at cost but reported at lower of cost or fair market value

Answer 1

Answer:

The correct answer is b.recorded at cost but reported at fair market value.

Explanation:

Investments represented in shares and in shares or shares of social interest will be recorded at their historical cost. Other investments, such as bonds, bonds, certificates, etc., will be accounted for at their nominal value. However, in case of differences between the latter and the historical cost, with the purpose of not breaking the basic accounting standard of "valuation or measurement", such differences will be controlled through complementary valuation auxiliary accounts of the investment, specifically in the titles in which the difference is presented. For this purpose, the discount items for amortization or premium for amortization will be used.