Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Chapter A2, Problem 12MCQ
When the market value of a company’s available-for-sale securities is lower than its cost, the difference should be:
a. shown as a liability.
b. shown as a valuation allowance added to the historical cost of the investments.
c. shown as a valuation allowance subtracted from the historical cost of the investments.
d. No entry is made, the securities are shown at historical cost.
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When the market value of a company’s portfolio of available-for-sale securities is lower than its cost，the difference should be: a. accounted for as a valuation allowance deducted from the asset to which it relates b. accounted for as an addition in the shareholders’ equity section of the balance sheet c. accounted for as a liability d. disclosed and described in a note to the financial statements but not accounted for.
(i). Debt investments not plan to sell reported at
a. amortized cost.
b. fair value.
c. the lower of amortized cost of fair value.
d. net realizable value.
(ii). which of the following caa be reported at fair value?
a. Debt investments.
b. Equity investments.
c. Both debt and equity investments:
d None of these answers' choices are correct.
choose the correct answer:
Equity security acquired for trading should be measured at reporting date
a. cost, being the purchase price
b. cost, being the purchase price plus transaction costs
c. fair value, with change in FV taken through profit or loss.
d. fair value, with change in FV taken through other comprehensive income.
Chapter A2 Solutions
Cornerstones of Financial Accounting
Ch. A2 - How do long-term investments differ from...Ch. A2 - Prob. 2DQCh. A2 - Prob. 3DQCh. A2 - Prob. 4DQCh. A2 - Prob. 5DQCh. A2 - Prob. 6DQCh. A2 - Prob. 7DQCh. A2 - How does the equity method discourage the...Ch. A2 - Prob. 9DQCh. A2 - Prob. 10DQ
Ch. A2 - Prob. 11DQCh. A2 - Prob. 12DQCh. A2 - Prob. 13DQCh. A2 - Prob. 14DQCh. A2 - Prob. 15DQCh. A2 - Prob. 1MCQCh. A2 - Prob. 2MCQCh. A2 - Prob. 3MCQCh. A2 - Prob. 4MCQCh. A2 - Prob. 5MCQCh. A2 - Prob. 6MCQCh. A2 - Prob. 7MCQCh. A2 - Prob. 8MCQCh. A2 - Prob. 9MCQCh. A2 - Prob. 10MCQCh. A2 - Prob. 11MCQCh. A2 - When the market value of a companys...Ch. A2 - Prob. 13MCQCh. A2 - Prob. 14MCQCh. A2 - Prob. 15MCQCh. A2 - Prob. 16MCQCh. A2 - Prob. 17ECh. A2 - Trading Securities Pear Investments began...Ch. A2 - Prob. 19ECh. A2 - Prob. 20ECh. A2 - Adjusting the Allowance to Adjust Trading...Ch. A2 - Prob. 22ECh. A2 - Prob. 23ECh. A2 - Prob. 24ECh. A2 - Prob. 25ECh. A2 - Prob. 26ECh. A2 - Prob. 27ECh. A2 - Prob. 28ECh. A2 - Prob. 29ECh. A2 - Prob. 30E
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Choose the correct answer: Equity security acquired for non-trading and the shares are not enough to warrant significant influence should be measured at the end of the period a. cost, being the purchase price b. cost, being the purchase price plus transaction costs c. fair value, with change in FV taken through profit or loss. d. fair value, with change in FV taken through other comprehensive incomearrow_forwardUnder PAS 1, which of the followingitem is not included in the computation of profit? Finance cost. Post-tax gain or loss on discounted operations. Unrealized gain in change in value of biological assets. Unrealized gain in change in value of available-for-sale securities.arrow_forward16. When the market value of a company's available-for-sale investments is lower than its cost, the difference should be a. reported as a liabilityb. reported in the footnotes to financial statementsc. deducted from the investment in available-for-sale securities accountd. added to the investment in available-for-sale securities accountarrow_forward
- Where are changes in the fair value of equity securities and reported? These fair values are readilydeterminable and the securities do not provide the owner with significant influence over the investee.a. as income or loss on the income statementb. as a component of accumulated other comprehensive income on the balance sheetc. as a prior-period adjustment to retained earnings on the balance sheetd. these value changes are not reported until the gain or loss is realizedarrow_forwardWhich of the following would trigger a subtraction in the indirect operating section? A. gain on sale of investments B. depreciation expense C. decrease in accounts receivable D. decrease in bonds payablearrow_forward4. Which of the following is not a component of other comprehensive income?a. Unrealized gain on equity investment measured at fair value through other comprehensive incomeb. Revaluation lossc. Unrealized gain from derivative contracts designated as cash flow hedged. Loss from translation of the financial statements of a domestic operation 5. Which of the following is a component of other comprehensive income?a. Unrealized loss from derivative contracts designated as fair value hedge.b. Unrealized loss on debt investment measured at fair value through other comprehensive incomec. Gain from translation of the financial statement of a domestic operation.d. Remeasurements of defined obligation plan, including accrual gain 6. Statement of comprehensive income can be presented asa. Two statements or single statement of comprehensive incomeb. Single statement of comprehensive income onlyc. Two statement of income statement or statement of comprehensive income onlyd. Statement of…arrow_forward
- Dividend revenue is recognized for trading securities and available for sale securities even if held at FVOCI. Gain on sale is the excess of the net selling price over the cost of the securities sold which is reported to profit or loss whether trading or available for sale securities held at FVOCI. a. Only the first statement is correct. b. Only the second statement is correct. c. Both statements are correct. d. Both statements are incorrect.arrow_forward15. Which of the following statements regarding available-for-sale equity investments is true? a. The realized gain on sale is determined by comparing the carrying value of the investment with its selling price.b. Income is affected by temporary changes in market value.c. All equity security investments are classified as noncurrent.d. Permanent declines in value are reported on the income statement.arrow_forwardUnder IFRS, a company: a. should evaluate only equity investments for impairment. b. accounts for an impairment as an unrealized loss, and includes it as a part of other comprehensive income and as a component of other accumulated comprehensive income until realized. c. calculates the impairment loss on debt investments as the difference between the carrying amount plus accrued interest and the expected future cash flows discounted at the investment's historical effective-interest rate. d. All of the above.arrow_forward
- Which of the following statements is correct? a. IFRS permits the fair value option for the equity method of accounting. b. GAAP permits recovery of impairment losses. c. Under IFRS, non-trading equity investments are accounted for at amortized cost. d. IFRS and GAAP both have a trading investment classification.arrow_forwardIn subsequent periods after purchase, investments in available-for-sale securities will be reported at fair value. cost. face value. par value. 2. For investments in available-for-sale securities, a debit balance in the Unrealized Holding Gain/Loss account reflects a cumulative unrealized gain. is reported as a negative element in the accumulated other comprehensive income section of shareholders' equity. is reported as a positive element in the accumulated other comprehensive income section of shareholders' equity. is reported as a positive element in the assets section of the balance sheet.arrow_forwardStatement 1: In the sale of a financial asset measured at fair value through OCI, the difference between the selling price and the carrying amount is recorded as a gain or loss on sale of investment. Statement 2: When the fair value of a financial asset measured at fair value through OCI is higher than its carrying amount, an unrealized loss-OCI is debited. A. Only statement 1 is true B. Only statement 2 is true C. Both statements are true D. Both statements are falsearrow_forward
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