Which investment must be reported at fair value by entities other than external investment pools?

Participating interest-earning investment contracts must be reported at fair value because they are typically designed to yield returns based on the performance of underlying assets. This type of investment can experience fluctuations in value as the asset backing it changes. Reporting at fair value provides a transparent view of the current market conditions and reflects the true economic reality of the investment's worth at the reporting date.

In contrast, short-term money-market securities and short-term interest-earning investment contracts are often considered more stable and are usually reported at amortized cost rather than fair value, unless specific circumstances require otherwise. This distinction emphasizes the nature of the assets and the associated risks, which is why participating interest-earning investment contracts are treated differently in financial reporting standards.