Why this is mistaken
A mixed portfolio does not use one ending-balance formula. Ask the learner to name the rights in each instrument before showing any amounts. A bond is a creditor interest. Ordinary shares are an ownership interest. A common-stock holding with supported significant influence may enter the equity method. Those routes can produce amortized cost, fair value through earnings, fair value with OCI, or an equity-method carrying amount.
A useful diagnostic gives the learner a bond, listed shares, and a 30-percent holding with a board seat. An answer that puts all three at cost or all three at fair value shows the error. Correct it by requiring a routing card with the instrument, scope Topic, classification or influence evidence, and next schedule. Arithmetic begins only after each card is complete.
When this mistake may appear
- A mixed portfolio is labeled simply as investments.
Your work may contain this mistake if:
- Apply one ending-balance formula to every holding.