When more than one security is sold for a single price and the total selling price is not equal to the sum of the market prices, the cash received is allocated between the securities based on:
A) Relative book values.
B) Par amounts
C) Relative market values.
D) The earnings per share.

Question

Quizplus · Accepted Answer

The cash received is allocated based on the relative market values of the securities. This method ensures that the allocation accurately reflects the relative value of each security in the market. Using book values or par amounts would not reflect the current market value of the securities. Earnings per share are not relevant in this scenario.

When More Than One Security Is Sold for a Single