If the fair value of equity securities is not determinable and the equity method is not appropriate, the securities should be reported at:
A) Amortized cost.
B) Cost.
C) Consolidated value.
D) Net present value.

Question

Quizplus · Accepted Answer

When the fair value of equity securities is not determinable and the equity method is not appropriate, the securities should be reported at cost. This is consistent with the historical cost principle and is also in accordance with the accounting standards for financial instruments. Amortized cost and net present value are methods used to value financial assets, but they are not applicable in this scenario. Consolidated value is also not applicable because it pertains to the consolidation of financial statements of affiliated companies.

If the Fair Value of Equity Securities Is Not Determinable