One of the Changes Introduced in IFRS 9 Financial Instruments

question 29

Essay

One of the changes introduced in IFRS 9 Financial Instruments was that realized gains on investments valued at fair value with revaluations through other comprehensive income were to be taken to retained earnings without being recycled through net income. Briefly explain how this eliminated one possible method of earnings management that previously allowed companies discretion in managing net income.

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Definitions:

Micromanagement

Micromanagement is a management style characterized by excessive control or attention to details, often resulting in a lack of autonomy for subordinates.

Interpersonal Relations

The connections and interactions between two or more people, often analyzed in a social or work context.

Organization

A systematic arrangement of people and resources designed to achieve a specific purpose or set of goals.

Emotional Impacts

The effects of experiences or events on an individual's feelings and emotional state.