Professional Research Your client, Cascade Company, is planning to invest some of its excess cash in 5-year revenue bonds issued by the county and in the shares of one of its suppliers, Teton Co. Teton’s shares trade on the over-thecounter market but trading activity is quite low. Cascade plans to classify these investments as trading. The company would like you to conduct some research on the accounting for these investments.

Instructions Access the IFRS authoritative literature at the IASB website (http://eifrs.iasb.org/) (you may register for free eIFRS access at this site). When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.)

(a) Since the Teton shares are not actively traded, Cascade argues that this investment’s market prices do not provide a good fair value measurement. According to the authoritative literature, what factors should be evaluated to conclude that a market price cannot be used as an estimate of fair value?

(b) To avoid volatility in their financial statements due to fair value adjustments, Cascade debated whether the bond investment could be classified as held-for-collection; Cascade is pretty sure it will hold the bonds for 5 years. What criteria must be met for Cascade to classify it as held-forcollection?