The firm's purpose for holding certain securities may change, requiring it to transfer securities from one category to another.The firm transfers the securities at _____ at the time of the transfer.

Question

Quizplus · Accepted Answer

Fair value is the most appropriate choice for transferring securities from one category to another as it represents the current market value of the asset. It ensures that the transfer is done at a reasonable price, which reflects the actual value of the security. Other methods such as amortized cost or net realizable value may not provide an accurate representation of the security's current value, which could lead to mispricing and inaccurate financial reporting. Therefore, fair value is the best choice for transferring securities.

The Firm's Purpose for Holding Certain Securities May Change, Requiring