STATEMENT 1 Where long term investments are reclassified as current investments transfers are made a...........

Accountancy (Phase -I & II) Accounting standards

STATEMENT 1: Where long-term investments are reclassified as current investments, transfers are made at the lower of cost and carrying amount at the date of transfer.

STATEMENT 2: Where investments are reclassified from current to long-term, transfers are made at the lower of cost and fair value at the date of transfer.

which statement is / are correct?

1 only

2 only

both 1 and 2

neither 1 nor 2

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Explanation:

Reclassification of Investments

Where a long-term investment is reclassified as a current investment, the transfer is made at carrying amount and lower of cost at the date of such transfer. Where an investment is reclassified from current investment to long-term investment, the transfer is made at the lower of its cost and the fair value of such investment at the date of such transfer.