Which loss affects a companys earnings per share?

a.Unrealized loss on HTM securities

b.Unrealized loss on trading securities

c.Unrealized loss on AFS securities

d.Unrealized loss on trading and AFS securities

A company buys an equity investment for $100 in 2016. At the end of 2016, the company still holds the investment and it has a market value of $115. In 2017, the company sells the investment for $108.

How is this information reported in the companys 2016 and 2017 income statements if the investment is classified as anAFS investment?

a.$15 gain on the 2016 income statement; $7 loss on the 2017 income statement

b.Does not appear on the 2016 income statement; $8 gain on the 2017 income statement

c.Does not appear on the 2016 income statement; $7 loss on the 2017 income statement

d.$8 gain on the 2016 income statement; does not appear on the 2017 income statement

A U.S. company holds available-for-sale securities carried at current fair value. It determines that previously reported declines in value are other than temporary. The effect of this decision is to:

a.Reduce accumulated other comprehensive income

b.Reduce reported net income

c.Reduce the asset, investment in AFS securities

d.Increase stockholders equity

Following U.S. GAAP, when should a company use the equity method to report an intercorporate investment?

a. The company significantly influences the decisions of the investee.

b. The investee is the companys major supplier.

c. The company owns 20 50% of the investees voting stock.

d. The company is holding the investment in its long-term portfolio.

A held-to-maturity investment with a book value of $6,000,000 is determined to be impaired in 2017 and is written down to $2,000,000. In 2018, the investments value increases to $6,500,000. Assume amortized cost without impairment is $6,000,000.

In 2018, following U.S. GAAP:

a.A $4,000,000 gain is reported in income.

b.A $4,500,000 gain is reported in income.

c.A $4,000,000 gain is reported in OCI.

d.No gain is reported.

Coca-Cola invests in securities of other companies and categorizes them as trading, AFS, and equity method investments. Which statement istrueconcerning impairment testing of these investments?

a.Impairment testing only occurs for investments with an active market.

b.Impairment is always reported if the book value of the investment significantly exceeds its market value.

c.Impairment testing only occurs for investments carried at fair value.

d.Only Coca-Colas AFS and equity method investments are tested for impairment.

The U.S. GAAP impairment test for equity method investments currently requires recognition of impairment losses when:

a.Fair value is less than carrying value and the decline in value is other than temporary.

b.A significant loss event occurs.

c.Fair value is less than cost.

d.Carrying value exceeds the greater of market value or value-in-use.

A company invests $500,000 in equity securities on April 30, 2016, and classifies them as trading securities. At December 31, 2016, the companys year-end, the securities have a fair value of $495,000. On February 1, 2017, the company sells the securities for $520,000.

Which statement istrueregarding how this information is reported in the companys financial statements?

a.The companys 2016 balance sheet reports the securities at $500,000, and a loss of $5,000 is reported on the 2016 income statement.

b.The companys 2016 balance sheet reports the securities at $495,000, and a gain of $20,000 is reported on the 2017 income statement.

c.The companys 2016 balance sheet reports the securities at $495,000, and a gain of $25,000 is reported on the 2017 income statement.

d.The companys 2016 balance sheet reports the securities at $500,000, and no gain or loss appears in the 2016 financial statements.

On January 1, 2017, Ola Company paid $388,900 for a $400,000 face value 3% corporate bond yielding 4%, interest paid annually on December 31, and classifies it as held-to-maturity. Olas reporting year ends December 31.

On its 2017 income statement, Ola reports interest revenue on the corporate bond of:

a.$12,000

b.$11,667

c.$15,556

d.$16,000