Which of the Following Statements Is Correct About the Fair

question 78

Multiple Choice

Which of the following statements is correct about the fair value option under IFRS?

• A) The fair value method increases volatility in retained earnings.
• B) Using the fair value method promotes mismatches because assets and liabilities are measured under different bases.
• C) IFRS does not allow fair value reporting for investments under the equity method.
• D) IFRS allows a company to revoke the fair value option at any time.

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Definitions:

Depreciated

The decrease in the value of an asset over time due to wear and tear, age, or obsolescence, typically accounted for on financial statements through depreciation expense.

Salvage Value

The anticipated market value of an asset at the conclusion of its utility period.

Declining-Balance Method

A method of accelerated depreciation where an asset loses value at a faster rate in its early years of use.

Revenue Expenditures

Expenditures that are immediately charged against revenues as an expense.