Question
1.Foraninvestmentclassifiedasheld-to maturity,anyunrealizedgainsandlossesarebothreportedinthefinancial statementsandalsodisclosedinthenotestothefinancialstatements. a.True b.False 2. Whenacompanypurchasesinvestmentswiththeintenttoprofitonshort-termchangesinprice,thecompanyshould classifytheseinvestmentsasavailable-for-sale. a.True b.False 3. TheUnrealizedHoldingGain/Loss-TradingSecuritiesaccountisatemporaryaccountthatwouldbeclosedto RetainedEarningsduringtheclosingprocess. a.True b.False 4. Available-for-salesecuritiesarerecordedatcost,whichequalsfairvalueontheacquisitiondate. a.True b.False 5. Whenanavailable-for-salesecurityissold,anyunrealizedgainsorlosseswouldneedtobereclassifiedfromthe AllowanceforChangeinFairValueofInvestmentsaccountinordertoavoiddoublecountinganygainsorlosses recordedincomprehensiveincome. a.True b.False
1.Foraninvestmentclassifiedasheld-to maturity,anyunrealizedgainsandlossesarebothreportedinthefinancial statementsandalsodisclosedinthenotestothefinancialstatements.
a.True
b.False
2. Whenacompanypurchasesinvestmentswiththeintenttoprofitonshort-termchangesinprice,thecompanyshould classifytheseinvestmentsasavailable-for-sale.
a.True
b.False
3. TheUnrealizedHoldingGain/Loss-TradingSecuritiesaccountisatemporaryaccountthatwouldbeclosedto RetainedEarningsduringtheclosingprocess.
a.True
b.False
4. Available-for-salesecuritiesarerecordedatcost,whichequalsfairvalueontheacquisitiondate. a.True
b.False
5. Whenanavailable-for-salesecurityissold,anyunrealizedgainsorlosseswouldneedtobereclassifiedfromthe AllowanceforChangeinFairValueofInvestmentsaccountinordertoavoiddoublecountinganygainsorlosses recordedincomprehensiveincome.
a.True
b.False
6.Investmentsecuritiesareclassifiedbaseduponmanagement'sintent.Thismaypresentdifficultiestoreadersof financialstatementsbecause a.management'sjudgmentofintentandabilitymaylackcomparability. b.management'sjudgmentmaylackrelevance. c.gaintradingmayresultinnotproducingsufficientgains. d.gaintradingmayresultinnotproducingsufficientreliability.
7.Investmentsindebtandequitysecuritiesthatareheldforcurrentresalebybanksandbrokeragefirmsaretermed
a.available-for-salesecurities.
b.tradingsecurities.
c.held-to-maturitysecurities.
d.marketablesecurities
8.Investmentsthataretypicallyheldforshortperiodsoftimeandsoldbythecompanyintheexpectationofaprofiton theshort-termdifferencesinpriceareclassifiedas
a.available-for-salesecurities.
b.tradingsecurities.
c.held-to-maturitysecurities.
d.marketablesecurities.
9.Whichofthefollowingcategoriesofinvestmentsarereportedattheirfairvaluesonthebalancesheetandhave unrealizedholdinggainsandlossesincludedasaseparatecomponentofshareholders'equity?
a.held-to-maturitydebtsecurities
b.marketablesecurities
c.available-for-salesecurities
d.tradingsecurities
10.OnJanuary1,2017,MacieCompanypurchasedJeffersonCompany's9%bondswithafaceamountof$200,000for $213,420toyield8%.ThebondsmatureonJanuary1,2027,andMaciehasboththeintentandabilitytoholdthese bondstomaturity.ThebondspayinterestannuallyonDecember31.AssumingMacieusestheeffectiveinterest methodofamortizingthebondpremium;interestincomereportedontheincomestatementfortheyearended December31,2017,wouldbe
a.$16,000.
b.$17,074.
c.$18,000.
d.$18,926
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Intermediate Accounting
Authors: kieso, weygandt and warfield.
14th Edition
