Fisher Corporation has the following investments at September 30,2016:

What method of accounting will Fisher use to account for its investment in ABC,if this investment is held for trading purposes?

Question

Fisher Corporation has the following investments at September 30,2016:

What method of accounting will Fisher use to account for its investment in ABC,if this investment is held for trading purposes?

Quizplus · Accepted Answer

If Fisher Corporation holds its investment in ABC for trading purposes, it will use the fair value through profit or loss method, because this method requires investments to be recorded at fair value with changes in fair value recognized in profit or loss. Trading investments are those that are bought and held for short-term profit and are actively traded. Therefore, Fisher would not use amortized cost, equity method or fair value through other comprehensive income, as these methods are used for investments that are not held for short-term profit and are not actively traded.

Fisher Corporation Has the Following Investments at September 30,2016