Question

Election of the fair value option (FVO) for financial assets Permits only for-profit entities to measure eligible items at fair value. Requires deferral of related upfront costs. Results in recognition of unrealized gains and losses in other comprehensive income of a business entity. Results in recognition of unrealized gains and losses in earnings of a business entity.

Answer 1

Answer: Results in recognition of unrealized gains and losses in earnings of a business entity

Explanation:

The election of the fair value option (FVO) for financial assets results in recognition of unrealized gains and losses in earnings of a business entity. The fair value option puts into consideration the unrealized gains and losses in earning of a business for financial assets.

For example, an election date occurs when an entity recognizes an investment in equity securities with readily determinable fair values issued by another entity.