Which one of the following is an example of investment incom

Which one of the following is an example of investment income from securities?

A. depreciation of longterm assets

B. gain on the sale of fixed assets

C. deferred tax assets

D. interest earned from debt securities

Solution

Answer - (d) - Interest earned from debt Securities

Explanation:-

A) - Depreciation is an non cash expenses which is charged to assets due to wear and tear of it. It is not income but an expense. Long term assets are not securities but fixed assets

B) - Gain on sale of Fixed assets is not investment income since assets are not securities but fixed assets

C) - Deferred tax asset is not investment income but arising out of the timing difference between Books of accounts and Income tax approach. Such deferred taxes are reversed over tbe time.

D) - Debt securities are investments. Debt securities generally include bonds. When investor buys corporate bonds, he is paid Principal plus interest income.

Hence Interest earned from debt securities is investment income from securities.