Question

Compare and contrast how unrealized gains and losses are treated under the following accounting standards:

a. Impairment Standard AASB 136
b. Revaluation Standard AASB 116
c. Inventory Standard AASB 102
d. Agricultural Standard AASB 141

Answer 1

Under different accounting standards, the treatment of unrealized gains and losses varies. The Impairment Standard does not recognize unrealized gains and losses, while the Revaluation Standard recognizes them in other comprehensive income. The Inventory and Agricultural Standards also do not recognize unrealized gains and losses.

Step-by-step explanation:

Under the Impairment Standard AASB 136, unrealized gains and losses are not recognized. Instead, if an asset's carrying amount exceeds its recoverable amount, an impairment loss is recognized.

On the other hand, under the Revaluation Standard AASB 116, unrealized gains and losses are recognized in other comprehensive income. These gains and losses are accumulated in a revaluation surplus account.

In the Inventory Standard AASB 102, unrealized gains and losses are not recognized. Instead, inventory is reported at the lower of cost and net realizable value.

Similarly, under the Agricultural Standard AASB 141, unrealized gains and losses are not recognized. Agricultural produce is measured at fair value less estimated point-of-sale costs.