CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

What does the FASB require regarding the disclosure of the fair value of financial instruments?
A. A company must not disclose the fair value of financial instruments because accounting emphasizes historical costs not fair values.
B. A company must disclose the fair value of financial instruments in the footnotes to the financial statements.
C. A company must disclose the fair value of financial instruments either on the face of the balance sheet or in the footnotes to the financial statements.
Explanation: Companies must disclose the market value of financial instruments either on the face of the balance sheet or in the footnotes to the financial statements.

User Contributed Comments 3

User Comment
murli Disclosure of Fair value is important not the place!
ThePessimist Place is important too. E.g. held to maturity investments must be shown on the balance sheet at amortized cost with fair value shown in a footnote. Each category has specific rules.
dblueroom I agree with ThePessimist that i.e. trading and available-for-sale securities are recorded at FMV. Held-to-maturity investments however are recorded at cost on the statement, but you do have a separate account for amortization of premium/discount.
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