Explain how the use of the fair value option for investments in debt securities
Part 1
Write: Make sure your response addressing the following question is more than 200 words and includes an in-text citation or a brief quote from the reading material where appropriate. You may want to review the Citing Within Your Paper (Links to an external site.) resource from the Ashford Writing Center for proper use of citations.
Explain how the use of the fair value option for investments in debt securities can mitigate volatility in reported earnings caused by measuring related assets and liabilities differently, without applying complex hedge accounting provisions. Additionally,
Illustrate your point with an example.
Include how to reduce volatility in your response.
Part 2
Write: Make sure your response addressing the following question is more than 200 words and includes an in-text citation or a brief quote from the reading material where appropriate. You may want to review the Citing Within Your Paper (Links to an external site.) resource from the Ashford Writing Center for proper use of citations.
Discuss the benefits to financial statement users when accountants separate the debt and equity features of hybrid debt securities. Additionally,
Why might this be necessary?
Explain your reasoning.
What might impact the way a user will classify the debt and equity features?
Answer preview to explain how the use of the fair value option for investments in debt securities
APA
613 words
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