16. 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 liability b. reported in the footnotes to financial statements c. deducted from the investment in available-for-sale securities account d. added to the investment in available-for-sale securities account

16. 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 liability b. reported in the footnotes to financial statements c. deducted from the investment in available-for-sale securities account d. added to the investment in available-for-sale securities account

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 12MCQ: When the market value of a companys available-for-sale securities is lower than its cost, the...

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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.
Which of the following statements is not true of the fair-value method of accounting for marketable securities? Select one: A. The investment account is recorded at current fair value on the balance sheet. B. Interim changes in the investments’ fair value may or may not affect income depending on the securities’ classification. C. This method is used when the reporting company generally owns less than 20% of the investee company. D. Dividends are treated as a return of the capital invested. E. None of the above
For investment in equity securities carried as FVOCI under PFRS 9, the difference between the carrying value of the investment and its related cumulative unrealized gain or loss-OCI is A. its unrealized gain or loss reported as a component of OCI for the period. B. its unrealized gain or loss reported under profit or loss for the period. C. its initial cost D. Its amortized cost
1. The unrealized gain/loss from investment valuation for trading securities and available-for-sale securities should be reported in: Select one: a. the income statement for both securities. b. the balance sheet statement for both securities. c. the income statement and the balance sheet statement, respectively. d. the balance sheet statement and the income statement, respectively. In applying the fair value option under ASC 825-10-25 (Predecessor literature Statement of Financial Accounting Standards No. 159: The Fair Value Option for Financial Assets and Financial Liabilities), a company Select one: a. has the option to apply the fair value option to its investments classified as securities held-to-maturity and securities-available-for-sale on an instrument-by-instrument basis. b. is required to apply the fair value option to its investments classified as securities held-to-maturity and securities available-for-sale. c. has to apply the fair value…
For investment in equity securities carried as FVOCI under PFRS 9, the difference between the carrying value of the investment and its related cumulative unrealized gain or loss-OCI is * A. its unrealized gain or loss reported as a component of OCI for the period B. Its amortized cost C. its initial cost D. its unrealized gain or loss reported under profit or loss for the period A gain or loss arising on the initial recognition of biological assets and from a change in the fair value less costs to sell of a biological asset shall be included in: * A. Profit or loss for the period B. Other comprehensive income C. A separate revaluation reserve D. Either in the profit or loss or the other comprehensive income for the period The following items are generally classified as plant assets, except: a. Improvements to leased facilities b. Property held for future plant sites c.…
13. For available-for-sale equity securities, receipt of a cash dividend would be reported as a. a reduction from retained earningsb. an increase in the investments available for sale accountc. a reduction in the investments available for sale accountd. dividend revenue
37. When an entity reduces its interest in an investment in equity securities accounted for by the equity method and changes in to the fair value method. What is the initial measurement of the investment for purposes of subsequent changes in market value? a. Carrying amount at the date of changea. Original costb. Market value at the date of changec. Market value at the date of acquisition
13 Which of the following is not correct in regard to trading securities a. they are held with the intention of selling them in a short period of time b. unrealized gain/loss are reported as part of net income c. Any premium or discount is not amortized d. all these statements are correct
14. For available-for-sale securities, a decline in value due to a temporary decline in market value below cost is a. disclosed in the financial statements by means of a footnoteb. disclosed as a reduction from stockholders' equity on the balance sheetc. disclosed as a loss on the income statementd. not disclosed because the decline in value is only temporary
In 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.
If the combined market value of equity investment at fair value through profit or loss at the end of the year is more than the market value of the same portfolio of trading securities at the beginning of the year, the difference should be accounted for by: a debit to equity investment O reporting an unrealized loss in security investment in the stockholders' equity section of the balance sheet a footnote to the financial statements reporting an unrealized loss in security investments in the income statement O reporting an unrealized gain in security investments in the income statement
Which of the following is false? A. Under PFRS 9, the basis of carrying investments in debt securities as FVPL, FVOCI, or at amortized cost, is the entity’s business model. B. Under PFRS 9, an investment in equity securities not held for trading is automatically accounted for as FVOCI. C. Reclassification of investment in equity securities under PFRS 9 is not allowed. D. Under PFRS 9, reclassification of investment in debt securities is allowed. Or none of the choices?