While No General Principle Describes the Nature of Items Excluded

question 101

Multiple Choice

While no general principle describes the nature of items excluded from net income and included in Other Comprehensive Income, they tend to arise from remeasurements of assets and liabilities (often, remeasurements at fair value) and not from transactions.For example, IFRS permits but does not require firms to revalue certain noncurrent assets upward to reflect increases in fair value in excess of acquisition cost.Under IFRS, such a revaluation remeasurement increases assets (because the firm now records an existing asset on the balance sheet at a larger number) and increases Other Comprehensive Income.These increases are accumulated in a(n) _____ account, Revaluation Surplus.

• A)liability
• B)shareholders' equity
• C)revenue
• D)asset
• E)expense

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Definitions:

Rate of Return

The gain or loss on an investment over a specified period, proportionally expressed as a percentage of the investment's initial cost.

Capital Gains

The profit realized from the sale of assets or investments when the selling price exceeds the original purchase price.

Market Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can deposit funds in the financial markets, influenced by supply and demand, inflation, and monetary policy.

Bond's Price

The current market value of a bond, which can fluctuate based on interest rate movements and the bond's credit quality.