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For some transactions GAAP requires that value changes are recognized on the balance sheet and the...

For some transactions GAAP requires that value changes are recognized on the balance sheet and the income statement when they occur, even if not realized. Discuss what types of transactions get this type of treatment and the logic behind this accounting.

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Expert Solution

Changes in the value of for-sale securities or trading securities leads to unrealized gains or losses. These have to be recognized in the balance sheet as well as in the income statement. This is in accordance with the matching principle and it is needed so that the investors of the company get a clear picture about the financial status of the company.

jeff jeffy answered 2 years ago
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