Using the fair value model, both unrealized and realized gains and losses would be reported in the income statement.

Question

Quizplus · Accepted Answer

Under the fair value model, both unrealized and realized gains and losses are reported in the income statement. Unrealized gains and losses arise when the fair value of an asset or liability changes but has not yet been realized through a transaction. Realized gains and losses occur when an asset or liability is sold or settled at a price that is different from its original cost or carrying value. Both types of gains and losses are recognized in the income statement.

Using the Fair Value Model, Both Unrealized and Realized Gains