A short-term marketable debt security was purchased on September 1, Year 1, between interest dates. The next interest payment date was February 1, Year 2. On the balance sheet at December 31, Year 1, the debt security should be carried at .a) Fair value plus the accrued interest paid.
b) Fair value.
c) Cost plus the accrued interest paid.
d) Cost.

The correct answer is b) Fair value.

Explanation:

Fair value is a concept used in accounting and refers to the price that could be paid for an asset or liability in a transaction, provided that the parties are duly informed and there is nothing that prevents them from acting freely and voluntarily.

The fair value will be the amount to be paid for an asset or liability in an orderly transaction, that is, in a transaction without pressure, in which the buyer and seller act freely. Therefore, we cannot speak of fair value if there is a sale in which the parties suffer pressures or act conditioned.

This term is used in international financial reporting standards (IFRS) and it is detailed that the fair value of an asset will be based on the price offered by the market.

The answer is B

Explanation:

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