Discuss the definition, recognition, and measurement of gains and losses
Gains and Losses
Gains (losses) are increases (decreases) in net assets from peripheral or incidental transactions of an entity and from other transactions and events affecting the entity except those that result from revenues (expenses) or investments by (distributions to) owners. Firms usually report gains and losses from sales of assets or settlements of liabilities at a net amount; that is, equal to the difference between the net asset received and the carrying value of the asset sold or between the net asset given and the carrying value of the liability settled. Gains and losses may also arise from the remeasurement of assets and liabilities. Firms realize gains and losses when they sell or exchange assets or settle liabilities in market transactions. Firms recognize gains and losses when those items enter the measurement of net income or other comprehensive income.
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What will be an ideal response?
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What will be an ideal response?
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