No lon explanation needed:

Question 1:

When management changes its intention regarding an investment in debt securities and transfers it from one category to another, such transfer will be made:

a. At amortized cost on the transfer date

b.At market value on the transfer date

c. At the lower of market value or amortized cost on the transfer date

d. At the higher of amortized cost or market value on the transfer date

Question 2:

When a transfer is made from the category of "Available for sale" to "To hold until maturity", the difference between market value and amortized cost:

a. NOT recognized

b. It is recognized as profit in the statement of income and expenses

c. It is recognized in ICAO and reclassified to the statement of income and expenses when the investment is sold.

d. It is recognized in ICAO and is amortized along with the bonus or discount of the bond

Question 3:

Say which of the following three statements is (are) true.

One: An investment in a debt security classified as "To hold to maturity" is impaired when "it is probable that the investor will not be able to collect all the amounts due in accordance with the contractual terms.

Two: The investment is reduced to its market value and that market value is the new cost (new cost basis)

Three: The corresponding debit is to "Allowance for doubtful accounts".

a. Only statement One is true

b. Assertion One and Two are both true

c. All three statements are true

d. None of the three statements is true.

Question 4:

When a bond classified as "available for sale" has suffered impairment:

a. A loss is recognized using the CECL model

b. A loss is recognized that CANNOT exceed the difference between the amortized cost and the market value.

c. No loss is recognized because the company will sell the bond immediately.

d. A loss is recognized as "Other comprehensive income".

Question 5:

A company (Investor) has an investment in common shares of another company (Investee). The investment represents 10% of the common shares of Investee.

a. The investment, as it is less than 20%, CANNOT be accounted for under the equity method.

b. If Investor has the ability to exert significant influence over Investee's operations, he may use the equity method if he wishes.

c. If Investor has the ability to exert significant influence over Investee's operations, he must use the equity method.

dAll investments in equity securities are carried at market value, regardless of whether or not the Investor has the ability to exert significant influence.

Question 6:

On January 2, 2020, Investor acquired 10% of the common shares of Investee. the cost of the investment was $ 50,000. In 2020, Investee, reported net income of $ 100,000 and paid dividends of $ 20,000. As of December 31, the market value of Investor's shares of Investee was $ 57,000. The effect of this investment on the Investor's Income and Expense Statement for 2020 was:

a. Dividend income of $ 2,000

b. Dividend income of $ 2,000 and unrealized gain of $ 7,000

c. Investment income of $ 10,000

d.Investment income of $ 10,000 and unrealized gain of $ 7,000

Question 7:

On January 2, 2020, Investor acquired 30% of the common shares of Investee. the cost of the investment was $ 50,000. In 2020, Investee, reported net income of $ 100,000 and paid dividends of $ 20,000. As of December 31, the market value of Investor's shares of Investee was $ 57,000. The effect of this investment on the Investor's Income and Expense Statement for 2020 was:

a. Dividend income of $ 6,000

b. Dividend income of $ 6,000 and unrealized gain of $ 7,000

c. Investment income of $ 30,000

d. Investment income of $ 30,000 and unrealized gain of $ 7,000

Question 8:

Say which of the following three statements is (are) true:

ONE: 20% investment is an automatic criterion; that is, if the investment is less than 20%, the equity method cannot be used.

TWO: If the investor owns 49% of the common shares of Investee, they have to use the equity method regardless of the circumstances.

THREE: The only way an investor can gain control over another company is by acquiring more than 50% of the common stock.

a. One, two and three

b. Only THREE

c. Two and three

d. None of the three

Question 9:

The fair value option (FVO) can be applied to the following investments:

a. Classified as Hold-to-Maturity (HTM)

b. Classified as available for sale (AFS)

c. Accounted for under the equity method

d. All of the above

Question 10:

Once the market value option (FVO) is adopted, the decision is irreversible.

a. TRUE

b. FALSE