The fair value method recognizes that the most relevant attribute for reporting investments is fair value. Therefore, at reporting dates, investments are adjusted to fair value. Gains and losses are excluded from net income until the investment is sold. This is an attempt to avoid recognition of gains and losses that have not been realized through sale. EXAMPLE As an example of the fair value method, assume that on 1 December 20X5, YZone Manufacturing Limited purchased two investments, both designated as available- for-sale investments. YZone bought 5,000 shares of Gerome Limited, a public company, for $ per share plus $1,200 in broker’s fees. YZone also purchased a.
