If market interest rates have changed materially s
If market interest rates have changed materially since a firm issued a bond, and the firm does not use the fair value reporting option, how is the change in the market value of the firm’s debt most likely to be reported in the firm’s financial statements?
A. The gain or loss in market value must be calculated and disclosed in the footnotes to the financial statements.
B. Net income and equity are unaffected, but the change is disclosed by the firm’s management.
C. Net income is unaffected, but the change in market value is recorded in other comprehensive income.
参考解答
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2024-10-27 14:11:33
Ans:B.
Material changes in the firm’s cost of debt capital should be included in the Management Discussion and Analysis section of the financial statements. If the firm does not use fair value reporting of debt obligations, net income and shareholders’ equity are not affected by changes in the market value of the firm’s debt, and disclosing its gain or loss in market value is not required.
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