Short-term investments have an original cost of $30,000 and a fair market vallue of $31,000 at December 31, 2018. At what amount would the investments be measured on the December 31, 2018 balance sheet?
A)$30,000
B)$31,000
C)($2,000)
D)$2,000

Question

Quizplus · Accepted Answer

Short-term investments are measured at their fair market value on the balance sheet. Since the fair market value of the investments is $31,000, this is the amount at which they would be measured on the balance sheet. Choice A is incorrect because this is the original cost, not the fair market value. Choice C is incorrect because a negative amount would not be used to measure an asset on the balance sheet. Choice D is incorrect because it is the difference between the original cost and fair market value, not the amount at which the investments would be measured on the balance sheet.

Short-Term Investments Have an Original Cost of $30,000 and a Fair