An advantage of using the fair value through other comprehensive income is that
A)the effect on other comprehensive income is reported in the income statement.
B)unrealized gains and losses are not used to evaluate management.
C)unrealized losses must be reversed, but unrealized gains are ignored for that security.
D)unrealized gains must be reversed, but unrealized losses are ignored for that security.

Question

Quizplus · Accepted Answer

Using fair value through other comprehensive income ensures that unrealized gains and losses are not used to evaluate management, which can help prevent short-term decision-making at the expense of long-term value creation. However, the effect on other comprehensive income is still reported in the statement of comprehensive income. Choices A, C, and D are not accurate statements related to fair value through other comprehensive income.

An Advantage of Using the Fair Value Through Other Comprehensive