Knowledge Check 01 Which of the following statements about investments in bonds are true? (Select all that apply.) Check All That Apply If the stated rate is higher than the market rate, investors will purchase the bond at a discount. If the stated rate is higher than the market rate, investors will purchase the bond at a premium. The investor values that stream of future cash flows based on the stated rate of the bond. The purchase price of a bond security is determined by computing the present value of the related stream of cash flows. Which of the following statements about accounting for investments when the investor does not have significant influence are true? (Select all that apply.) Check All That Apply The FVOCI (fair value through other comprehensive income) treatment used for investments in equity securities in IFRS is similar to the trading securities (TS) treatment used for debt investments in U.S. GAAP. Under IFRS, investments in equity securities are classified as either TS (trading securities) or AFS (available for sale). Under IFRS, the accumulated unrealized gain or loss associated with a sold investment is transferred from AOCI to retained earnings, without passing through the income statement Under U.S. GAAP, realized gains and losses on equity investments are reclassified out of OCl and into net income when the investment is later sold. Knowledge Check 01 Which of the following statements about the equity method are true? (Select all that apply.) Check All That Apply International accounting standards require the equity method for use with significant influence investees. U.S. GAAP require the equity method for use with significant influence investees. U.S. GAAP requires that the accounting policies of investees be adjusted to correspond to those of the investor when applying the equity method. Both IFRS and U.S. GAAP provide the fair value option for all investments that qualify for the equity method