Asked by Lindsey Hagen on Jun 25, 2024
Verified
Short-term investments in bonds are accounted for using the fair value through profit or loss model.
Fair Value Through Profit
A financial accounting treatment where changes in fair value of assets or liabilities are recorded in the profit or loss for the period.
Short-Term Investments
Investments that are expected to be converted into cash within one year and are often seen in the form of stocks, bonds, or certificates of deposit held by a company.
- Analyze the reporting requirements for trading investments, including the treatment of dividends and gains/losses.
Verified Answer
MG
Monica GonzalezJun 30, 2024
Final Answer :
True
Explanation :
Short-term investments in bonds are often accounted for using the fair value through profit or loss model, especially if they are held for trading purposes or designated at fair value through profit or loss at inception. This method involves recognizing changes in fair value in the profit or loss for the period.
Learning Objectives
- Analyze the reporting requirements for trading investments, including the treatment of dividends and gains/losses.