Asked by Jeffrey Morales on Jun 17, 2024
Verified
A realized gain or loss is reported on the income statement when an equity investment account is adjusted to reflect changes in fair value.
Fair Value
A measure of the estimated price at which an asset could be bought or sold or a liability settled, under current market conditions.
- Contrast actual versus potential financial gains and losses and their repercussions on financial statements.
Verified Answer
NC
Neisy CullerJun 18, 2024
Final Answer :
False
Explanation :
A realized gain or loss is reported on the income statement when an asset is actually sold, not when its fair value changes on paper. Adjustments to reflect changes in fair value are typically recognized in other comprehensive income, not the income statement, until the asset is sold.
Learning Objectives
- Contrast actual versus potential financial gains and losses and their repercussions on financial statements.