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- I-Equity investments held for trading fall under FVPL II-Equity Investments at FVPL are presented as current assets in a properly classified statement of financial position a. Both statements are true b. Only statement II is true c. Both statements are false d. Only statement I is trueWhich is a correct statement below? A. Equity is the residual interest in the liabilities of the entity after deducting all of its assets.B. Subscriptions receivable shall preferably be reflected as a deduction from the related subscribed share capital.C. Share premium is also known as capital stock.D. A deficit is a credit balance in retained earnings.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
- Choose the incorrect statement below: A. Retained earnings are the funds contributed by shareholders in excess of par or stated value.B. Equity is defined as the residual interest in the assets of an entity after deducting all of the liabilities.C. Conversion of preference shares into ordinary shares directly affects retained earnings.D. The statement of changes in equity is a formal statement that shows the movements in the elements or components of the shareholders' equity.All of the following are key similarities between GAAP and IFRS with respect to accounting for investments except: a. IFRS and GAAP require the same accounting for equity securities. b. IFRS and GAAP apply the equity method to significant influence equity investments. c. IFRS and GAAP have a fair value option for financial instruments. d. the accounting for impairment of investments is similar, although IFRS allows recovery of impairment losses. 2. Which of the following statements is correct?17. If an SME declares dividends to holders of its equity instruments after the end of the reporting period, the SME a. shall not recognize those dividends as a liability at the end of the reporting period. b. may recognize those dividends as a liability at the end of the reporting period. c. may present the dividends declared as a segregated component of retained earnings at the end of the reporting period. d. a and b
- Which of the following statements is TRUE regarding the equity method? A. The equity method is used for reporting gains or losses for non-strategic investments. B. The investor's share of the associate's dividends declared is reported as revenue. C. The investor's investment in the associate changes in direct relation to the changes taking place in the associate's equity accounts. D. The equity method reports unrealized gains and losses on revaluations to fair value in net income.For each item below, indicate to which category of elements of financial statements it belongs. (Asset, liabilities, equity, none of them) a. Retained earnings. c. Share Premium. e. Depreciation. g. Interest payable. i. Gain on sale of investment. b. Sales. d. Inventory. f. Loss on sale of equipment. h. Dividends. j. Issuance of ordinary shares.Which of the following is NOT correct regarding trading securities * a. Unrealized holding gains or losses are reported in profit or loss b. Share in profit of the investee increases carrying value of the investment c. These are classified as current assets. d. Cash dividends shall be recognized as dividend income
- Choose the correct answer: Under IFRS 9, the cumulative balance of equity as a result of measuring the investment at fair value through OCI a. shall be reversed to profit or loss once security has been sold. b. shall be reversed to profit or loss once security has been impaired. c. shall not be reversed to profit or loss but can be transferred to another equity account. d. shall not be reversed to profit or loss nor transferred to another equity account. .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 temporaryQUESTION 7 What are the effects on the accounting equation from the recognition of an unrealized loss on trading securities? a. Stockholders' equity decreases, and liabilities increase. b. Assets and stockholders' equity decrease. c. No effects, as unrealized gains and losses should not be recorded d. Assets and liabilities decrease.