The fair value option for liabilities permits recognition of gains and losses due to changes in the market values.

Question

Quizplus · Accepted Answer

The fair value option for liabilities allows for the recognition of gains and losses resulting from changes in market values. This option is typically used for financial instruments, such as bonds or loans, and allows for more accurate reporting of a company's financial condition by reflecting the current market value of these instruments.

The Fair Value Option for Liabilities Permits Recognition of Gains