Held-to-maturity securities O affects other comprehensive income and appear as financing activities on the statement of cash flows. O are never disclosed in the notes to financial statements. O are shown in other comprehensive income. O are shown in net income in the period sold with unrealized holding gains and losses disclosed in the notes.
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- 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 incomeFor each case of a financial asset that is not related to one another, explain (must be accompanied by an explanation) whether meeting the contractual cash flow test consists of only principal and interest: 1) Investments in debt instruments in the form of bonds with a specified maturity date. The bonds have a predetermined principal payment and interest on the principal amount payable is linked to the stock equity index on the stock exchange 2) Investments in debt instruments in the form of bonds from toll road management companies, whose contractual cash flows from these financial assets change according to the number of motorized vehicles that use certain toll roads. 3) Investments in debt instruments with a specified maturity date. A variable interest rate which gives the borrower the option of choosing a market rate of three months LIBOR for three months or one month LIBOR for one monthWhich of the following is true if a company reports an unrealized increase in fair value of available-for-sale securities using an allowance account? The spreadsheet and statement of cash flows do not reflect this transaction. The spreadsheet accounts for this transaction, but it is not reflected in the statement of cash flows. The spreadsheet does not account for this transaction, but it is reflected in the statement of cash flows. Both the spreadsheet and the statement of cash flows reflect this transaction.
- Which statement is not true? Equity investment and trading debt investment have the same accounting about how to report their unrealized gain/loss and how to report them on the balance sheet. Only debt securities, not equity securities, can be classified as held-to-maturity, available-for-sale or trading. Change in fair value of available-for-sale and held-to-maturity debt investments have no impact on net income. Cash flows relating to held-to-maturity investments and trading investments involve both investing and operating activities.1. If depreciable equipment is sold at a gain, this transaction will appear the investing activities section only. the financing activities section only. both the operating activities and the investing activities sections. both the operating activities and financing activities sections. 2. Which of the following is true if a company reports an unrealized increase in fair value of available-for-sale securities using an allowance account? The spreadsheet and statement of cash flows do not reflect this transaction. The spreadsheet accounts for this transaction, but it is not reflected in the statement of cash flows. The spreadsheet does not account for this transaction, but it is reflected in the statement of cash flows. Both the spreadsheet and the statement of cash flows reflect this transaction.In preparing a statement of cash flows, the reconciliation of net income to cash from operating activities does not include A. Gain from sale of treasury shares. B. Gain on sale of financial asset classified as trading. C. Bond discount or premium amortization for the period D. Loss on sale of intangible assets.
- List of Accounts Cash Debt Investments Dividend Revenue Fair Value Adjustment-Available-for-Sale Fair Value Adjustment-Stock Fair Value Adjustment-Trading Gain on Sale of Debt Investments Gain on Sale of Stock Investments Interest Receivable Interest Revenue Loss on Sale of Debt Investments Loss on Sale of Stock Investments No Entry Revenue from Stock Investments Short-Term Investments Stock Investments Unrealized Gain or Loss-Equity Unrealized Gain or Loss-IncomeThe purchase of treasury stock is reported on the statement of cash flows as aa. negative cash flow in the financing activities section.b. negative cash flow in the investing activities section.c. positive cash flow in the financing activities section.d. positive cash flow in the investing activities sectionDetermine the effect on the statement of cash flows. Section: Operating, Investing, Financing or N/A Effect: Add, Subtracting, No effect Section Effect Bonds payable converted into common stock issuance of notes receivable amortization of bond premium the decrease in deferred tax asset issuance of stock dividends
- Why are unrealized gains and losses on available-for-sale securities not reported in theincome statement, but instead are reported in other comprehensive income, and thenshown in accumulated other comprehensive income (AOCI) in the balance sheet?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.Investing activities do not include cash inflows from Select answer from the options below A. collection of principal on loans to other entities. B. interest revenue from notes receivable. C. sale of debt or equity investments. D. sale of property, plant, and equipment.