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Bakersfield College ACG 2021 True/False Questions 1)Securities classified as held to maturity could be reported as either current or long-term in a classified balance sheet, depending upon their maturity dates
Bakersfield College
ACG 2021
True/False Questions
1)Securities classified as held to maturity could be reported as either current or long-term in a classified balance sheet, depending upon their maturity dates.
- All investments in debt securities whose fair values are not readily determinable are carried at historical cost.
- Both debt and equity securities can be categorized as trading securities.
- Net unrealized holding gains (losses) are reported in the income statement for trading securities.
- Purchases and sales of securities are always reported as investing activities in a statement of cash flows.
- Routine transfers of debt and equity investments among the trading, available for sale, and held to maturity portfolios need not be disclosed in the financial statements.
- Both trading securities and securities available for sale are reported at their fair values.
- All securities considered available for sale should be reported as current assets in a classified balance sheet.
- Unrealized gains and losses are included in other comprehensive income for securities that are classified as available for sale.
- When available-for-sale securities are sold, the amount of gain or loss realized from the date of purchase is included in before-tax net income.
- Companies must always use the equity method when they hold between 25% and 50% of the common stock of an investee.
- The equity method is in many ways a partial consolidation.
- Under the equity method of accounting for a stock investment, cash dividends received are considered a reduction of the investee's net assets.
- When an equity method investment is sold, a gain or loss is recognized for the difference between its selling price and its cost.
- If an investment is accounted for under the equity method, the investor reduces investment income and the investment account for amortization of goodwill acquired in the investment.
- Selecting the fair value option for an available-for-sale investment is equivalent to reclassifying that investment as a trading security.
- The fair value option cannot be elected for significant-influence investments because those must be accounted for under the equity method.
- Under IAS No. 39, investments for which the investor lacks significant influence use basically the same reporting classifications as those used under U.S. GAAP.
- Under IFRS No. 9, investments for which the investor lacks significant influence use basically the same reporting classifications as those used under U.S. GAAP.
- Under IFRS No. 9, debt investments are classified as either “available for sale” or “fair value through profit and loss (FVPL).”
- Under IFRS No. 9, debt investments are classified as either “amortized cost,” or “fair value through profit and loss (FVPL),” or “fair value through other comprehensive income (FVOCI).”
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