Passive Investments Can Be Classified as Fair Value Through Profit

question 21

Multiple Choice

Passive investments can be classified as fair value through profit or loss (FVTPL) or as fair value through other comprehensive income (FVTOCI) . Which of the following statements is true?

• A)Under both FVTPL and FVTOCI, changes in the fair value of the investment are reported as other comprehensive income on the statement of comprehensive income.
• B)Under both FVTPL and FVTOCI, changes in the fair value of the investment are reported under the net income section on the statement of comprehensive income.
• C)Under both FVTPL and FVTOCI, dividends received from the investee are reported under the net income section on the statement of comprehensive income.
• D)Under both FVTPL and FVTOCI, dividends received from the investee are reported as other comprehensive income on the statement of comprehensive income.

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Definitions:

Representativeness Heuristic

Representativeness Heuristic is a cognitive shortcut that involves judging the probability of an event by its similarity to a prototype.

Recognition-Primed Decision Making

A model that describes how people make quick, effective decisions by recognizing patterns and similarities with past experiences.

Mental Simulations

The cognitive process of imagining or visualizing a scenario in one's mind to predict outcomes, plan actions, or solve problems.

Deductive Validity

A characteristic of a deductive argument where if the premises are true, the conclusion must also be true, ensuring the argument's logical soundness.