How are marketable securities valued on the balance sheet?
A) Historical cost.
B) At cost or fair value depending on how the securities are classified.
C) Market value.
D) At fair value with the difference between cost and fair value reported as revenue.

Question

Quizplus · Accepted Answer

Marketable securities can be classified as either held-to-maturity, trading, or available-for-sale, and their valuation on the balance sheet depends on their classification. Held-to-maturity securities are valued at amortized cost, trading securities at fair value with changes in fair value reported in net income, and available-for-sale securities at fair value with changes in fair value reported in other comprehensive income. Thus, option B is the correct answer.

How Are Marketable Securities Valued on the Balance Sheet