Question

An example of "dirty surplus" (associated with gains and losses reported directly to equity) is the use of: a. Extraordinary items b. 401K plans c. Available-for-sale marketable securities d. Other post-employment benefits

Answer 1

The correct answer is letter "C": Available-for-sale marketable securities.

Step-by-step explanation:

"Dirty surplus" net income represents all gains resulting from uncommon comprehensive income or unusual items that are recorded in the firm's Retained Earnings. Dirty surplus could be the result of unrealized gains and losses of securities available-for-sale, foreign currency translations, and derivative assets and liabilities. These surplusses are called "dirty" because they distort the net income of the real operations of the company.