In recognizing a decline in the market value of a trading investment, Loss on Fair value adjustment account is debited
A) because management intends to realize this loss in the near future.
B) to reflect the fair value of the investment on the balance sheet.
C) because the company is no longer a going concern.
D) because there is a permanent decline in the fair value.

Question

Quizplus · Accepted Answer

The Loss on Fair Value Adjustment account is debited to reflect the fair value of the investment on the balance sheet, ensuring that the investment is reported at its current market value, in accordance with fair value accounting principles.

In Recognizing a Decline in the Market Value of a Trading