Current IFRS Rules for Equity Investments That Are Traded in an Active

question 6

Multiple Choice

Current IFRS rules for equity investments that are traded in an active market require that they

• A) can be accounted for under the cost model.
• B) can be accounted for under the fair value through net income model.
• C) should generally be accounted for under the fair value through other comprehensive income model.
• D) cannot be accounted for under the fair value through net income model.

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Definitions:

Operating Expenses

Expenses that are incurred during the normal operation of a business, excluding the cost of goods sold.

Capital Budgeting

The approach of orchestrating and administering a business's enduring investments towards major initiatives or assets.

Straight-Line Depreciation

A scheme for apportioning the cost of a concrete asset over its lifespan in steady yearly payments.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder value maximization, such as new machinery, replacement of machinery, new plants, and research development projects.