Asked by Yulia Novikova on Jun 24, 2024
Verified
IFRS does not permit use of the fair value option for equity-method investments.
IFRS
International Financial Reporting Standards, a set of accounting standards developed by the IASB that is used globally.
Fair Value Option
The fair value option is an accounting approach allowing companies to measure and report certain assets and liabilities at their fair values to better reflect market conditions.
Equity-Method Investments
An accounting treatment for investments in which the investor has significant influence over the investee, typically between 20% and 50% ownership, requiring the investor to include its share of the investee's income.
- Identify the circumstances that lead to the selection of the fair value option in accounting for investments.
Verified Answer
JG
Jazmín GómesJun 30, 2024
Final Answer :
True
Explanation :
According to IFRS, fair value option is not permitted for equity-method investments. Instead, these investments are reported at amortized cost or at fair value through other comprehensive income (FVOCI).
Learning Objectives
- Identify the circumstances that lead to the selection of the fair value option in accounting for investments.