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Chpt 17 wiley
Intermed A 2 chpt 17
| Question | Answer |
|---|---|
| Select the correct statement regarding the impact on stockholders’ equity of a transfer from available-for-sale to trading. | The unrealized gain or loss at the date of transfer increases or decreases stockholders’ equity. |
| The unrealized gain or loss at the date of transfer increases or decreases stockholders’ equity. | he unrealized gain or loss at the date of transfer increases or decreases stockholders’ equity. |
| Unrealized holding gains and losses are recognized in net income for available-for-sale debt securities. | False |
| Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses and are included as other comprehensive income and as a separate component of stockholders' equity are | available-for-sale debt securities |
| Need to practice adjustment account problem from question #6 | or Allowance to reduce inventory contra account from cram problems |
| The unrealized gains and losses on available-for-sale securities are | reported on the portfolio of investments. |
| Trading securities are generally held for less than: | 3 months |
| An unrealized holding gain on a company's available-for-sale securities should be reflected in the current financial statements as | other comprehensive income and included in the equity section of the balance sheet |
| Equity security holdings between 20 and 50 percent indicates that the investor has a controlling interest over the investee. | false has to be over 50 |
| Holdings between 20% and 50% of another company’s voting stock are accounted for using the equity method. | true |
| An ownership interest of 15% in another company’s voting stock should be accounted for using the: | Fair Value Method |
| An ownership interest of 30% of the common stock of another corporation should be accounted for using the: | Equity method |
| If the parent company owns 90% of the subsidiary company's outstanding common stock, the company should generally account for the income of the subsidiary under the | Equity method |
| 50% ownership in another company investor has | Controlling interest |
| 20 % to 50% ownership in another company investor has | significant influence |
| 0- to 20% ownership in another company investor has | passive interest |
| Investments are reported at market value on the balance sheet under the equity method. | False Investments reported under the equity method are carried at cost, and periodically adjusted by the investor’s share of the investee’s earnings or losses, and decreased by all dividends received from the investee |
| Which of the following statements related to impairments of investments is not correct? | If the decline in value is considered temporary, the cost of the individual security is written down to a new cost basis. |
| Companies with investments accounted for using the equity method cannot elect the fair value option. | false |
| Companies base impairment for debt and equity securities on a(n) | Fair value |
| statements regarding accounting for derivatives | 1. they should be recognized in the financial statements as assets and liabilities. 2. gains and losses resulting from hedge transactions are reported in different ways, depending upon the type of hedge. 3 they should be reported at fair value. |
| Derivatives should be recognized in the financial statements as assets and liabilities. | true |
| A fair value hedge may be used to offset the exposure to changes in the fair value of an unrecognized commitment. | true |
| Derivatives such as fair value hedges are recorded at amortized cost. | false |
| Derivatives such as fair value hedges are recorded at | fair value |
| Cash flow hedges are reported at fair value with gains and losses | reported in equity as part of other comprehensive income. |
| Which of the following statements regarding accounting for derivatives is false? | gains and losses resulting from speculation should be deferred |
| Unrealized holding gains and losses on cash flow hedges are | reported as a component of other comprehensive income |
| An option to convert a convertible bond into shares of common stock is a(n) | embedded derivative |
| A variable-interest entity has | insufficient equity investment at risk |
| A variable-interest entity where | stockholders lack decision making rights & stockholders do not absorb the losses or receive the benefits of a normal stockholder |
| Which of the following is not a required disclosures related to financial instruments? | combining or netting the fair value of separate financial instrument |
| Unrealized holding gains and losses on cash flow hedges are included in net income. | False |
| To qualify for special accounting for hedges treatment, the hedging transaction must be? | highly effective. |
| An option to convert a convertible bond into shares of common stock is | embedded derivative. |
| An option to convert a convertible bond into shares of common stock is a(n) | embedded derivative |
| In a variable-interest entity, stockholders may not absorb losses or receive the returns of a normal stockholder. | true |
| In a variable-interest entity all stockholders have decision-making rights. | In a variable-interest entity all stockholders have decision-making rights. |
| A variable-interest entity has | insufficient equity investment at risk. |
| Which of the following is not a required disclosures related to financial instruments? | combining or netting the fair value of separate financial instruments. |
| Unrealized holding gains and losses from speculation in derivatives are recognized immediately in income. | true |
| Companies that attempt to exploit inefficiencies in various derivative markets by attempting to lock in profits by simultaneously entering into transactions in two or more markets are called | arbitrageurs. |
| All of the following statements regarding accounting for derivatives are correct | 1.they should be recognized in the financial statements as assets and liabilities. 2. gains and losses resulting from hedge transactions are reported in different ways, depending upon the type of hedge. 3. they should be reported at fair value |
| are considered equity securities? | Call or put options. |
| An option to convert a convertible bond into shares of common stock is a(n) | embedded derivative. |
| One required disclosure for financial instrument is that a separate classification of other comprehensive income the net gain/loss on derivative instruments designated in cash flow hedges must be presented. | true |
| The fair value and related carrying value of the instrument is a required disclosures related to financial instruments. | TRUE |
| GAAP requires that both the cost and fair value of all financial instruments be reported in the notes to the financial statements. | true |
| Recovery of impairment | is permitted by IFRS for held-for-collection securities but prohibited by US GAAP for held-to-maturity securities |
| Both IFRS and U.S. GAAP use the same test to determine whether the equity method of accounting should be used. | true |
| Both IFRS and U.S. GAAP use the same test of significant influence with a general guide of over? | 20 percent ownership to determine whether the equity method of accounting should be used. |
| Both the FASB and the IASB believe that reporting fair values for financial assets and liabilities provides more useful and relevant information relative to historical cost. | Fair value is the treatment for reporting financial assets and liabilities. |
| Unrealized holding gains or losses from non-trading equity investments are reported: | IFRS Comprehensive income |
| the approach and location where gains and losses from non-trading securities are reported: | IFRS Equity |
| Net interest + | Actual interest??? |
| Characteristics of a derivative financial instrument | 1. has one or more underlying's and an identified payment option 2. Requires or permits net settlement |
| with a available for sale investments on external financial reporting? | Co is prohibited from recording the recover in value of the impaired investment |
Created by:
smcdo11