18. An entity, with an investment in debt securities carried as FVOCI, deemed its original business model as not applicable starting November 30, 2020, and decided to reclassify its investment as FVPL. Which of the following statements is true?[* The reclassification shall be made on November 30, 2020; the investment is O transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to retained earnings The reclassification shall be made on January 1, 2021; the investment is Otransferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to profit or loss The reclassification shall be made on January 1, 2021; the investment is O transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to retained earnings The reclassification shall be made on November 30, 2020; the investment is transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to profit or loss

18. An entity, with an investment in debt securities carried as FVOCI, deemed its original business model as not applicable starting November 30, 2020, and decided to reclassify its investment as FVPL. Which of the following statements is true?[* The reclassification shall be made on November 30, 2020; the investment is O transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to retained earnings The reclassification shall be made on January 1, 2021; the investment is Otransferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to profit or loss The reclassification shall be made on January 1, 2021; the investment is O transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to retained earnings The reclassification shall be made on November 30, 2020; the investment is transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to profit or loss

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 2MC: During 2021, Anthony Company purchased debt securities as a long-term investment and classified them...

See similar textbooks

Similar questions

An entity, with an investment in debt securities carried as FVOCI, deemed its original business model as not applicable starting November 30, 2020, and decided to reclassify its investment as FVPL. Which of the following statements is true? A. The reclassification shall be made on November 30, 2020; the investment is transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to profit or loss B. The reclassification shall be made on January 1, 2021; the investment is transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to profit or loss C. The reclassification shall be made on January 1, 2021; the investment is transferred at fair value from FVOCI to FVPL; the cumulative gain or loss previously recognized in OCI is transferred to retained earnings D. The reclassification shall be made on November 30, 2020; the…
17. When a debt investment at FVOCI is reclassified to FVPL, an entity willa. Remeasure the investment to the original cost and eliminate the cumulative unrealized gain or loss in OCI.b. Transfer the cumulative unrealized gain or loss to retained earningsc. The cumulative gain or loss previously recognized in OCI is reclassified to profit or loss.d. The effective rate at the date of reclassification shall be the basis for interest income to be recognized in subsequent periods.
16. When a debt investment at FVOCI is reclassified to amortized cost, the entity will a. Remeasure the financial asset to original cost. b. The effective rate used for amortization shall be the effective rate at the date of reclassification. c. The cumulative gain or loss previously recognized in OCI is removed from equity and adjusted against the fair value at the reclassification date. d. The cumulative gain or loss previously recognized in OCI is removed from equity and transferred to profit and loss.
Under PFRS9, reclassification of investment in equity securities: A. Is allowed as long as it is based on a change in the entity's business model B. Is allowed, as long as the reclassification is made within the year the investment was acquired C. Is allowed, since the entity always has the option to carry the investment as either FVPL or FVOCI D. Is not allowed
YA Inc. wishes to transfer its equity investments initially classified as fair value through other comprehensive income to profit or loss. On December 31, 2020, the fair value of the investment is P100,000 while on January 1, 2021 which is the date of reclassification, the fair value is P110,000. Assuming that the entity will make the reclassification, how much is the gain to be reported on January 1, 2021 related to the reclassification? A.POB.P110,000C.P100,000D.P10,000
On January 1, 2021, an entity purchased marketable equity securities for P5,000,000. The equity securities did not qualify as a financial asset held for trading, and the entity made an irrevocable election to present unrealized gain and loss in other comprehensive income. The entity also paid P50,000 as commission to the broker. The entry to record this purchase would include a.A debit to commission expense, P50,000 b.A debit to Financial asset - FVOCI, P5,000,000 c.A debit to Financial asset - FVOCI, P4,950,000 d.A debit to Financial asset - FVOCI, P5,050,000
An entity had investments in marketable debt securities costing 650,000 that were classified as available-for-sale. On June 30, year 2, it decided to hold the investments to maturity and accordingly reclassified them to the held-to-maturity category on that date. The investments’ fair value was 575,000 at December 31, year 1, 530,000 at June 30, year 2, and 490,000 at December 31, year 2. The entity does not elect the fair value option to account for these investments. What amount of loss from investments should the entity report in its year 1 income statement? What amount should the entity report as net unrealized loss on marketable debt securities in its year 2 statement of stockholders’ equity?
On January 1, 2020, the Deluxe Corporation purchased equity securities to be held for trading purposes for P2,000,000. The company also paid commission, taxes and other transaction costs amounting to P50,000. The securities had fair values at December 31, 2020 and 2021, respectively; P1,750,000 and P2,100,000. No securities were sold during 2021. What amount of unrealized gain or loss should be reported in the 2021 profit or loss section of the statement of comprehensive income?
2. On January 1, 20x1, an entity purchased marketable equity securities for P2,500,000. The entity paid commission and taxes of P190,000. The equity securities do not qualify as financial asset held for trading. The entity made irrevocable election to present unrealized gain and loss in other comprehensive income. The securities have a market value of P2,600,000, and P2,750,000 on December 31, 20x1 and December 31, 20x2. O n July 1, 2022, half of the securities are sold for P1,400,000. On December 31, 20x2, how much shall be shown in the statement of comprehensive income as unrealized gain/ loss? (sample answer: 10,500 UG or 10,500 UL)
On October 2020, X Corporation purchased a financial instrument that qualifies as a derivative and serves as a hedge for market value risk. At the end of the year the instrument increased in value by 4,000 . How should corporation X present that profit in the financial statements? Half as part of net income and the other half as comprehensive income you shouldn't recognize it within net income as other comprehensive income
On January 1, 2021, an entity purchased marketable equity securities for P5,000,000. The equity securities qualify as a financial asset held for trading. The entity also paid P50,000 as commission to the broker. At year-end, the trading securities have a fair value of P6,000,000. The increase in fair value should be recorded with: a.A credit to Financial asset - FVPL, P1,000,000 b.A debit to Unrealized gain - OCI, P1,000,000 c.A debit to Financial asset - FVPL, P1,000,000 d.A debit to Unrealized gain - P/L, P1,000,000
On January 1, 2020, the Evergreen Corporation purchased marketable equity securities for P2,000,000. The company also paid commission, taxes and other transaction costs amounting to P50,000. Because the securities were acquired not for immediate trading, Evergreen exercise its option to take the change in fair values through other comprehensive income. The securities had the following fair values at December 31, 2020 and 2021, respectively; P1,750,000 and P2,100,000. No securities were sold during 2020 and 2021. What amount of unrealized gain or loss should be reported in the December 31, 2021 statement of financial position as a component of shareholder’s equity.