Module $9$

Which of the following statements does not accurately describe the fair$-$value method of accounting?

A$)$ Investments for which current, reliable fair values exist are accounted for using this method.

B$)$ Held$-$to$-$maturity investments are not accounted for using this method.

C$)$ Dividends and interest received are recognized in current income.

D$)$ The investment is recorded on the balance sheet at its fair value.

E$)$ None of these are correct.

When the fair value of a company's portfolio of passive investments in marketable equity securities exceeds its book value, the difference should be:

A$)$ Added to the investment account

B$)$ Added to stockholders' equity of the investee

C$)$ Written off as an impairment

D$)$ Added to goodwill

E$)$ None of these are correct.

In its year$-$end financial statements, Big Bank Corporation reports marketable debt securities of $$221,919$ million. The footnotes disclose that these securities have an amortized cost of $$223,446$ million.

Which of the following is true?

A$)$ These are available$-$for$-$sale securities$.$

B$)$ These are trading securities$.$

C$)$ There are net unrealized losses of $$1,527$ million on these securities$.$

D$)$ Both A and $C$

E$)$ Both B and C

Following is a portion of the investments footnote from Red Inc.$\text{'}$s annual financial statements.

$\backslash$table$[[($in millions$),$$$492,006$