BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a reduction of an asset of $5, 000 and a realized loss of $5, 000.
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a reduction of an asset of $5, 000 and an unrealized loss of $5, 000 in the stockholders’ equity section.
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a reduction of an asset of $5, 000 in the current assets section and an unrealized loss of $5, 000 in “Other expenses and losses.”
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a reduction of an asset of $5, 000 in the current assets section and a realized loss of $5, 000 in “Other expenses and losses.”
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Detailed explanation-1: -The Board’s definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Basically it is an exit price.
Detailed explanation-2: -Held-for-trading securities are reported at fair value, and unrealized/gains or losses are reflected in earnings.
Detailed explanation-3: -First time adoption of Ind ASs requires selection/mandatory adoption of the accounting period in which Ind AS based financial statements shall be prepared for the first time. Based on the Ind AS adoption period, the date of transition is determined.
Detailed explanation-4: -1 For assets classified according to a liquidity presentation, non-current assets are assets that include amounts expected to be recovered more than twelve months after the reporting period. Paragraph 3 applies to the classification of such assets.