Question
Standard setters are under pressure from regulators to provide adequate information to financial markets for improved asset allocation decisions. As such, the standard setters favor
Standard setters are under pressure from regulators to provide adequate information to financial markets for improved asset allocation decisions. As such, the standard setters favor the use of fair value in financial reporting. Using fair valuation requires the recognition of unrealized gains and losses. Standard setters generally recognize these gains and losses in other comprehensive income (OCI) rather than net income. Which theory of regulation does this decision to report unrealized gains and losses in OCI represent? Explain your conclusion.
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