Misconception · MIS:fair-value-option-is-period-end-plug

Mistaken idea “The fair value option is a period-end plug”

Mistaken reasoning: This mistake elects fair value after observing the desired income result or uses it to repair an amortized cost schedule.

Updated Aug 21, 2026 Review due Nov 8, 2026

Why this is mistaken

Eligibility and a permitted election date precede measurement. The option is not a reversible plug and does not validate fair value.

Where to watch

When this mistake may appear

  • Period-end fair value is available.
Check your work

Your work may contain this mistake if:

  • Choose fair value if it makes the balance or earnings look better.