1-At the end of the most recent financial year, Company FG has a Debt Investment.

The Amortized Cost of the Debt Investment is $300,000

Company FG decides that the Debt Investment is held for trading purposes.

The Fair Value at the year-end is $175,000.

The Journal Entry to record Fair Value includes:

Select one:

a. None of these answers

b. Credit: Unrealized Holding Loss - Income $25,000

c. Debit: Unrealized Holding Gain - Income $25,000

d. Credit: Fair Value Adjustment $125,000

e. Debit: Fair Value Adjustment $125,000

2- At the end of the most recent financial year, CompanyTRD has a Debt Investment.

The Amortized Cost of the Debt Investment is $300,000

Company TRD decides to report the investment at Fair Value.

The Fair Value at the year-end is $315,000.

The Journal Entry to record Fair Value includes:

a. Debit: Fair Value Adjustment $15,000

b. Credit: Fair Value Adjustment $15,000

c. Debit: Cash $15,000

d. Debit: Unrealized Holding Gain $15,000

e. None of these answers

3- Company Y purchased 1 million shares in another company (Company JKL) for $1 each ($1 million in total) on 1 January 2019.

The shares had a fair value of $3 on 31 December 2019. Company Y still owns all of the shares.

Company Y holds the shares for trading purposes and owns just 5% of Company JKL.

In the journal entry required on 31 December 2019, Company Y will Debit the Fair Value Adjustment Account with how much?

a. $2,000,000

b. $1,000,000

c. $4,000,000

d. None of these answers

e. $3,000,000

4-Fair Value is generally the same as:

a. Market Value

b. Amortised Cost

c. Original Cost

d. Activity Based Cost

5-Suppose a Bond Investment is sold for $220,000.

The Amortized Cost (after recording the Interest Revenue) is $190,000 at the date of sale.

The Journal Entry to Record the Sale of the Debt Investment will include:

Select one:

a. None of these answers

b. Debit: Gain on Sale of Debt Investment $30,000

c. Credit: Loss on Sale of Debt Investment $30,000

d. Debit: Loss on Sale of Debt Investment $30,000

e. Credit: Gain on Sale of Debt Investment $30,000