When two or more classes of equity securities are purchased for a lump sum, and the market value of neither security can be reliably determined, the lump sum payment should be allocated between the classes of securities based on the number of shares of each security purchased.

Question

Quizplus · Accepted Answer

The lump sum payment should be allocated between the classes of securities based on their relative fair values at the time of purchase. If the market value cannot be reliably determined, other methods of estimating fair value must be used, not simply the number of shares.

When Two or More Classes of Equity Securities Are Purchased