Where are changes in the fair value of equity securities and reported? These fair values are readily determinable and the securities do not provide the owner with significant influence over the investee. a. as income or loss on the income statement b. as a component of accumulated other comprehensive income on the balance sheet c. as a prior-period adjustment to retained earnings on the balance sheet d. these value changes are not reported until the gain or loss is realized

Q: 14. For available-for-sale securities, a decline in value due to a temporary decline in market value…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: True/False Companies do not report changes in the fair value of available-for-sale debt securities…

A: Available for sale securities are securities which are held with the intention of selling them…

Q: Equity Investment classified at Fair Through Other Comprehensive Income (choose which of the…

A: Long term investments are the investment or assets that are beneficial for the firm for a number of…

Q: an initial recognition an entity may make an irrevocable election to present in other comprehensive…

A: According to the accounting stantdard if an entity makes an investment and shows it in in other…

Q: Which of the following statements is not true of the fair-value method of accounting for marketable…

A: Fair value: Fair value is the price at which, both seller and buyer agree to exchange the asset. So,…

Q: Investments in equity securities for which the investor has insignificant influence over the…

A: Fair value: Fair value is the price at which, both seller and buyer agree to exchange the asset. So,…

Q: 37. When an entity reduces its interest in an investment in equity securities accounted for by the…

A: Introduction: If an investor company invests and acquires between 20 to 50% stake in the investee…

Q: All of the following are true of the effect of fair value accounting on the financial statements…

A: Fair value accounting: uses the Current Market Values as the basis for Recognizing Assets &…

Q: Secondary market trading of a company’s previously issued shares directly affects the company’s real…

A: Primary market is the market where securities are dealt for the first time. Secondary market is the…

Q: For fi nancial assets classifi ed as trading securities, how are unrealized gains and lossesrefl…

A: Trading securities are debt or equity assets that management expects to aggressively sell for gain…

Q: All of the following statements are true regarding available-for-sale securities except   a.changes…

A: The financial instruments that are tradable and can be used to raise capital in private and public…

Q: Dividend revenue is recognized for trading securities and available for sale securities even if held…

A: Solution Concept Dividend is recognized in income statement for trading securities if they are held…

Q: When holding held-to-maturity securities, a company should disclose at each balance sheet date the…

A: We shall answer the first question since the exact question wasn't specified. Please resubmit a new…

Q: eported earnings become overstated as a result of failure to record  a. the amortization of premium…

A: Solution Concept The reported earnings is overstated when the expenses has not been recorded or…

Q: A permanent decline in the fair value of the investment in equity securities that ABC Corp has…

A: Here discuss about the details of the recognition of the permanent decline in the fair value of…

Q: IFRS requires companies to measure their financial assets at fair value except when based on: a.…

A: IFRS or International Financial Reporting Standards are accounting strategies that are applicable in…

Q: The accounting assumption or principle of is being violated if a company that is a party to major…

A: Solution: The accounting assumption or principal of Full disclosure is being violated if a company…

Q: Which of the following would result from watered shares? overstated capital understated assets…

A: solution : Which of the following would result from watered shares? Correct answer is overstated…

Q: Which of the following statements is true about conting consideration under the revised PFRS 3? O…

A: Contingent consideration is defined as the obligation or liability of the buyer or acquirer to…

Q: . Which of the following statements regarding available-for-sale equity investments is true? a.…

A: As the name suggests the available-for-sale equity or securities are the equities that are held to…

Q: Which of the following statements is/are FALSE regarding the differences between the New issue…

A: Primary market is the part of capital market which deals in newly issued securities. It facilitates…

Q: Which of the following is not correct in regard to trading securities     a. they are held with the…

A: Answer -    Option a. they are held with the intention of selling them in a short period of time -…

Q: Choose the correct answer:  Equity security acquired for non-trading and the shares are not enough…

A: Solution Concept When there is no significant influence then the investment is financial asset Debt…

Q: designation s to whether the equity investment is at FVPL or OCI depends upon whether the securities…

A: There are many methods of the valuations and based on the valuation there are classifications of…

Q: Investments in equity securities for which the investor has insignificant influence over the…

A: In layman’s words, financial management is the management of the finance or funds in an…

Q: Which of the following is correct regarding the classification of investment in debt instruments as…

A: Option (b) is correct. Explanation is given in next step.

Q: An important element in accounting for investment securities concerns the distinction between its…

A: Investment securities are those that are acquired with the intention of investing in the future. It…

Q: 4. Which of the following is not a component of other comprehensive income? a. Unrealized gain on…

A: ‘’Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: When holding available-for-sale securities, a company should disclose for each income statement…

A: It is investment in debt or equity but it intent to sale before its maturity.

Q: Why are unrealized gains and losses on trading securities reported in the incomestatement?

A: Unrealized gains and losses: Trading securities are reported at their fair values. Unrealized gains…

Q: The statement of shareholders' equity reports the effects from the recognition or valuation of…

A: Other comprehensive Income includes all gains and losses, revenue and expenditures which have not…

Q: Common Stock investments using the fair value method are: A. reported at fair value on the balance…

A: Common Stock investments using the fair value method are reported at fair value as on the balance…

Q: Discuss the arguments for each position. Some individuals maintain that the only proper accounting…

A: The argument for this statement is this that whether to use current value or not is totally depends…

Q: Current Attempt in Progress When a company holds between 20% and 50% of the outstanding stock of an…

A: SOLUTION- The investor should use the equity method to account for its investment unless…

Q: Which of the following items affect equity without going through the income statement? Group of…

A: A) Purchase of treasury stock decreases equity and assets and not dealt in income statement. B)…

Q: All investments in debt securities and investments in equity securities for which the investor lacks…

A:

Q: Unrealized holding gains and losses for trading securities are: a) Reported as a separate com ponent…

A: A security is a financial instrument, generally any financial asset that can be traded.…

Q: Why are unrealized gains and losses on available-for-sale securities not reported in theincome…

A: Definition: Generally Accepted Accounting Principle (GAAP): Generally Accepted Accounting Principle…

Q: When a company holds between 20% and 50% of the outstanding stock of an investee, which of the…

A: The correct answer is:-  The investor should use the equity method to account for its investment…

Q: Changes in the fair value of held to maturity securities are: A. not recognized. B. recognized on…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: Comprehensive income consists of O operating income + other income and losses net income + other…

A: please like the answer your response matters  comprehensive income consists of other comprehensive…

Q: An auditor’s analytical procedures indicate a lower than expected return on an equity…

A: Definition:

Q: For investment in equity securities carried as FVOCI under PFRS 9, the difference between the…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which of the following statements is false?   A The declaration of a dividend may not result in a…

A: Dividend: Distribution of company profits to the shareholders ( Real owners of the company ) is…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.