Which method of accounting for investments results in unrealized gains and losses because the investments must be marked to market?
A)equity method
B)amortized cost method
C)fair value method
D)trading method

Question

Quizplus · Accepted Answer

The fair value method requires that investments be marked to market, resulting in unrealized gains and losses. This is different from the amortized cost method, where investments are tracked at their original cost (adjusted for any amortization or impairment), and the equity method, where investments are accounted for based on the investor's share of the investee's income. The trading method is also marked to market, but it only applies to investments purchased with the intent of selling in the near term, which may not be applicable to all types of investments.

Which Method of Accounting for Investments Results in Unrealized Gains