For which of the following items are the effects always shown in net income in the period they occur?
A) Changes in a company's estimates of the impact of changing life expectancy on its pension obligations.
B) Changes in the market value of a company's short-term investment in various stocks.
C) Changes in foreign currency exchange rates, for a company with foreign subsidiaries.
D) Changes in the market value of bonds that the company intends to hold until they mature.

Question

Quizplus · Accepted Answer

Changes in the market value of a company's short-term investment in various stocks are recognized in the income statement, and thus affect net income in the period they occur. This is because such investments are typically classified as either trading securities or available-for-sale securities, with changes in fair value of trading securities directly impacting net income.

For Which of the Following Items Are the Effects Always