Derivatives should be valued at
A) historical cost.
B) fair value or historical cost.
C) fair value.
D) discounted cost.

Question

Quizplus · Accepted Answer

According to accounting standards (ASC 815), derivatives should be valued at fair value. This means that the value of the derivative should reflect the current market price or a reasonable estimate of the market price. Valuing derivatives at historical cost or discounted cost may not accurately reflect their current value and could lead to misleading financial statements. Fair value or historical cost (choice B) may also be used in some cases, but fair value is generally considered the most appropriate method for valuing derivatives.

Derivatives Should Be Valued at