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

Question

Quizplus · Accepted Answer

The advantage of using the fair value through other comprehensive income (FVOCI) approach is that unrealized gains and losses are recognized in other comprehensive income rather than in profit or loss. This means they do not immediately affect the net income and, consequently, are not used to evaluate management's performance, which can provide a more stable measure of performance over time.

An Advantage of Using the Fair Value Through Other Comprehensive