Investment : The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment. Held-to-maturity security : The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities. Other-than-temporary (OTT) impairment : When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment. Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the stockholders’ equity , other than stock investments and dividends. Comprehensive income : The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income. Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

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Answer 1

Question

Chapter 12, Problem 12.31E

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.

Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the stockholders’ equity, other than stock investments and dividends.

Comprehensive income: The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

2.

To determine

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

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E17.6 (LO1) (HFCS Debt Securities Entries and Financial Statement Presentation) At December 31, 2019, the held-for-collection and selling debt portfolio for Steffi Graf SA is as follows. Security Amortized Cost Fair Value Unrealized Gain (Loss) A €17,500 €15,000 (€2,500) B 12,500 14,000 1,500 C 23,000 25,500 2,500 Total €53,000 €54,500 1,500 Previous fair value adjustment balance-Dr. 400 Fair value adjustment-Dr. €1,100 On January 20, 2020, Steffi Graf SA sold security A for €15,100. The sale proceeds are net of brokerage fees. Instructions a. Prepare the adjusting entry at December 31, 2019, to report the portfolio at fair value. b. Show the statement of financial…

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- Assuming no other transactions are noted regarding these financial assets at fair value through profit or loss, what is the amount of unrealized gain/loss reported in the 2021 income statement relating to these securities? A. P29,000 loss B. P20,000 loss C. P29,000 gain D. P20,000 gain - What is the gain on sale reported in A Company's 2022 income statement? A. P38,000 B. P18,000 C. P9,000 D. P0 - Assuming that the securities held by A Company are classified as at fair value through other comprehensive income, what is the gain on sale reported in A Company's 2021 income statement? A. P38,000 B. P18,000 C. P9,000 D. P0

Answer 2

Question

Chapter 12, Problem 12.31E

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.

Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the stockholders’ equity, other than stock investments and dividends.

Comprehensive income: The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

2.

To determine

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

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Answer 3

Question

Chapter 12, Problem 12.31E

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.

Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the stockholders’ equity, other than stock investments and dividends.

Comprehensive income: The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

2.

To determine

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

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Answer 4

Question

Chapter 12, Problem 12.31E

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.

Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the stockholders’ equity, other than stock investments and dividends.

Comprehensive income: The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

2.

To determine

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 12.31E

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.

Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the stockholders’ equity, other than stock investments and dividends.

Comprehensive income: The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

2.

To determine

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

Answer 6

Chapter 12, Problem 12.31E

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.

Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the stockholders’ equity, other than stock investments and dividends.

Comprehensive income: The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

Answer 7

Chapter 12, Problem 12.31E

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Other-than-temporary (OTT) impairment: When the market value of an investment declines to a value lower than its cost, it is referred to as OTT impairment.

Other Comprehensive income (OCI): OCI includes all financial items which result in changes in the stockholders’ equity, other than stock investments and dividends.

Comprehensive income: The total of net income and other comprehensive income (OCI) is referred to as comprehensive income. Comprehensive income should be reported on income statement, and statement of comprehensive income.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

Answer 8

2.

To determine

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

Answer 9

2.

To determine

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 12 - All investments in debt securities are classified...Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5Q Ch. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8Q Ch. 12 - Prob. 12.9Q Ch. 12 - Prob. 12.10Q

Solution Summary: The author explains the rules of debiting and crediting different accounts while they occur in business transactions to abide by the double-entry system.

To Indicate: The effect of the following scenarios on the 2018 Income Statement of Company B.

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Chapter 12 Solutions