FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Investments

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

Transfers between categories

A) result in companies omitting recognition of fair value in the year of the transfer.
B) are accounted for at fair value for all transfers.
C) are considered unrealized and unrecognized if transferred out of held-to-maturity into trading.
D) will always result in an impact on net income.

E) C) and D)
F) All of the above

Correct Answer

verified

Show Answer

Question 72

Multiple Choice

Review LaterAdd Note

Review Later

A requirement for a security to be classified as held-to-maturity is

A) ability to hold the security to maturity.
B) positive intent.
C) the security must be a debt security.
D) All of these are required.

E) C) and D)
F) B) and C)

Correct Answer

verified

Show Answer

Question 73

Multiple Choice

Review LaterAdd Note

"Gains trading" or "cherry picking" involves

An investor has a long-term investment in stocks. Regular cash dividends received by the investor are recorded as

All of the following are characteristics of a derivative financial instrument except the instrument

Gains or losses on cash flow hedges are

Use the following information for questions 93 and 94. On its December 31, 2014 balance sheet, Calhoun Company appropriately reported a $10,000 debit balance in its Fair Value Adjustment (available-for-sale) account. There was no change during 2015 in the composition of Calhoun's portfolio of equity investments held as available-for-sale securities. The following information pertains to that portfolio: -What amount of unrealized loss on these securities should be included in Calhoun's stockholders' equity section of the balance sheet at December 31, 2015?

Match the approach and location where gains and losses from available-for-sale securities are reported:

Use the following information for questions 7 and 8 Rushia Company has an available-for-sale investment in the 10%, 10-year bonds of Pear Company The investment's carrying value is $3,200,000 at December 31, 2014. On January 9, 2015, Rushia learns that Pear Company has lost its primary manufacturing facility in an uninsured fire. As a result, Rushia determines that the investment is impaired and now has a fair value of $2,300,000. In June, 2016, Pear Company has succeeded in rebuilding its manufacturing facility, and its prospects have improved as a result. -If Rushia Company determines that the fair value of the investment is now $3,900,000 and is using U.S. GAAP for its external financial reporting, which of the following is true?

Koehn Corporation accounts for its investment in the common stock of Sells Company under the equity method. Koehn Corporation should ordinarily record a cash dividend received from Sells as

On December 29, 2015, James Company sold an equity security that had been purchased on January 4, 2014. James owned no other equity securities. An unrealized holding loss was reported in the 2014 income statement. A realized gain was reported in the 2015 income statement. Was the equity security classified as available-for-sale and did its 2014 market price decline exceed its 2015 market price recovery?

Use the following information for questions 108 and 109. Tracy Company owns 4,000 of the 10,000 outstanding shares of Penn Corporation common stock. During 2015, Penn earns $300,000 and pays cash dividends of $100,000. -Tracy should report investment revenue for 2015 of

During 2014, Woods Company purchased 60,000 shares of Holmes Corporation common stock for $945,000 as an available-for-sale investment. The fair value of these shares was $900,000 at December 31, 2014. Woods sold all of the Holmes stock for $17 per share on December 3, 2015, incurring $42,000 in brokerage commissions. Woods Company should report a realized gain on the sale of stock in 2015 of

Debt securities that are accounted for at amortized cost, not fair value, are

Under IFRS, both the investor and the investee should follow the same accounting practices, requiring adjustments be made to the investor's books in order to prepare financial information.

Santo Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods?

Use the following information for questions 99 through 102. The summarized balance sheets of Goebel Company and Dobbs Company as of December 31, 2014 are as follows: -If Goebel Company acquired a 30% interest in Dobbs Company on December 31, 2014 for $215,000 and the equity method of accounting for the investment were used, the amount of the debit to Equity Investments (Dobbs) would have been

Unrealized holding gains or losses which are recognized in income are from securities classified as

The fair value option allows a company to

If a decline in a security's value is judged to be temporary, a company needs to write down the cost basis of the individual security to a new cost basis.