If a company chooses the fair value option, a decrease in the fair value of the liability is recorded by crediting
A) Bonds Payable.
B) Gain on Restructuring of Debt.
C) Unrealized Holding Gain/Loss-Income.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

When a company opts for the fair value option and there's a decrease in the fair value of a liability, it is recorded by crediting "Unrealized Holding Gain/Loss-Income." This reflects the gain due to the revaluation of the liability at its current fair market value, impacting the income statement.

If a Company Chooses the Fair Value Option, a Decrease