In accounting for minority passive equity investments, the unrealized holding gain or loss on equity securities is recorded on: Multiple Choice the balance sheet as a deferred charge in the period of the security price change. the balance sheet as a separate component of stockholders’ equity. the income statement in the period of the security price change. the income statement in the period after the security price change.

In accounting for minority passive equity investments, the unrealized holding gain or loss on equity securities is recorded on: Multiple Choice the balance sheet as a deferred charge in the period of the security price change. the balance sheet as a separate component of stockholders’ equity. the income statement in the period of the security price change. the income statement in the period after the security price change.

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 5MC

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Briefly describe how to determine and record any subsequent increases or decreases in the fair value of a minority passive investment in equity securities.
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 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
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
For which of the following purposes is it LEAST logical for a company to issue equity securities on the primary market? For capital raising For liquidity improvement For increasing the return on equity None of the options. All of the given purposes support primary shares issuance.
QUESTION 49 Which of the following observations is NOT consistent with the accounting for investments in equity securities where there is no significant influence? The investor recognizes income from the investment as dividends are declared by the investee. Changes in the number of investment shares resulting from stock dividends, stock splits, or reverse splits must be formally recorded by the investor. Investments are carried by the investor at fair value. When the securities are remeasured to fair value as of the end of each period, any resulting difference is an unrealized gain or loss to be recognized in income.
Which of the following statements correctly describe characteristics of preference shares? Group of answer choices A. The required return on preference equity is expected to be less than the required return from ordinary equity. B. None of the other statements are correct C. A participating preference share participates in the interest payments paid to debtholders. D. Preference shares are called “hybrid” securities because they display characteristics of both short-term and long-term debt.
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
1. What is the accounting for treasury share transactions? a. Treasury shares are accounted for as financial assets. b. On repurchase or re-issuance of previously purchased own shares, no gain or loss is recognized. c. On re-issuance of treasury shares, a gain or loss is recognized equal to the difference between the previous repurchase price and the re-issuance price. d. On repurchase of treasury shares, a gain or loss is recognized equal to the difference between the amount at which the shares were issued and the repurchase price for the shares.
1. What is the accounting for treasury share transactions? a. On repurchase or re-issuance of previously purchased own shares, no gain or loss is recognized. b. Treasury shares are accounted for as financial assets. c. On re-issuance of treasury shares, a gain or loss is recognized equal to the difference between the previous repurchase price and the re-issuance price. d. On repurchase of treasury shares, a gain or loss is recognized equal to the difference between the amount at which the shares were issued and the repurchase price for the shares. . 2. If a no-par value share is issued... a. The value of each share is automatically ₱5. b. The corporation is automatically in violation of its state charter. c. There is no legal capital. d. The entire proceeds is considered as legal capital. . 3 Which of the following statements relating to bonds is incorrect? a. None of the choices b. A bond’s face value is the amount the issuer must pay…
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.
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