The Fair value adjustment-accounts receivable account is an asset valuation account
A)that would be adjusted upward or downward as fair values change and as the receivables are collected.
B)that is created when fair value accounting is adopted but is not subsequently adjusted.
C)that can only be adjusted downward.
D)that is unaffected by the subsequent collection of receivables.

Question

Quizplus · Accepted Answer

The Fair value adjustment-accounts receivable account is an asset valuation account that reflects the difference between the carrying value and the fair value of accounts receivable. This account is adjusted upward or downward as fair values change and as the receivables are collected. Therefore, A is the best choice as it correctly explains that the account is adjusted based on changes in fair value and collections of receivables.

The Fair Value Adjustment-Accounts Receivable Account Is an Asset Valuation