Regarding the reporting of investment income under the FV-NI method, for companies reporting in accordance with ASPE, which of the following statements is true?

Question

Quizplus · Accepted Answer

Under the FV-NI method for investment reporting, companies reporting in accordance with ASPE are required to separate interest income from net gains or losses recognized on financial instruments. This is because interest income is typically earned from fixed income securities, while gains and losses come from investments in equity and other marketable securities. Therefore, it is important to distinguish between the two when reporting investment income. Choice B is incorrect because holding gains and losses can be classified as either capital gains or losses or as part of other comprehensive income, and are not necessarily always tracked separately from interest and dividend income. Choice C is also incorrect because dividends recognized on financial instruments are typically classified as part of net gains or losses, rather than being separately reported from interest income. Finally, choice D is incorrect because statement A is true.

Regarding the Reporting of Investment Income Under the FV-NI Method