Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FA 322 > Chapter 12: Part A > Flashcards

Chapter 12: Part A Flashcards

1
Q

Debt

A

bonds and notes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Equity

A

common and preferred stock

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

3 types of investments for ownership less than 20%

A

Held to maturity
Trading security
Available for sale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

20% < investment < 50%

A

Equity method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

50% < investment

A

consolidation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

HTM is reported at cost

A

amortized on BS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

TS are reported @

A

face value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

AFS reported @

A

face value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

unrealized G/L of TS reported on…

A

current period earnings on IS

retained earnings @ shareholders equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Unrealized G/S of AFS reported on…

A

OCI (shareholder’s equity)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

investment revenue from debt

A

interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

investment revenue from equity

A

dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Fair Value option

A

when HTM & AFS become TS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

on maturity date of HTM it is called

A

principal or face amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

journal entry for purchase of HTM

A

(debit) Investment in HTM - face amount
(credit) discount - difference
(credit) cash - amount paid, PV calculated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Market value of a fixed HTM relative to market rate

A

opposite

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

effective interest method (for discount HTM)

A

effective market rate
* outstanding balance
= investment revenue

18
Q

first entry for HTM discount bond (dec 31)

A

(debit) cash
(debit) discount
(credit) investment rev

19
Q

you do not recognize what for HTMs

A

unrealized holding gains and losses

20
Q

When the market rate of HTM decreases (making it a premium) therefore changing the FV/Pv. What do you do?

A

you do not recognize the change in FV. Instead you report it on the BS or IS, as long as temporary. The HTM will still be recorded at amortized cost (outstanding balance). not unrealized holding gains/losses

21
Q

trading securities are recorded at

A

cost = total amount paid + brokerage fees

22
Q

journal for purchase of ‘TS’

A

(debit) investment in bond
(credit) discount
(credit) cash

23
Q

recognizing revenue for ‘TS’

A

(debit) cash
(debit) discount
(credit) investment rev.

24
Q

TS is recognized by what on BS

A

fair value

25
Q

how to determine the UNrealized g/s of a TS

A

identify the amortized cost, then determine the FV adjustment (outstanding bal. - new FV value = FV adjustment)

26
Q

sale JL for TS

A

(debit) cash
(debit) discount
(credit) investment in bond
(credit) gain on sale

27
Q

What happens when a TS is sold (gains/losses)

A

all unrealized become realized, therefore removed and on net income

28
Q

effects of TS on the IS

A

FV changes included whether unrealized or realized and does NOT affect AOCI

29
Q

effects of TS on the BS

A

FV is in current assets and does NOT affect AOCI on shareholders equity

30
Q

effects of TS on the CF

A

operating activity, unless not held for sale in near term it is investing activity

31
Q

AFS effects on IS

A

Realized on NI

Unrealized on OCI

32
Q

AFS effects on BS

A

investments at fair value

unrealized on AOCI under shareholder eq.

33
Q

AFS effects on CF

A

investing activity

34
Q

journal entry for unrealized loss in FV adj for TS

A

(debit) net unrealized holding g/s (IS)

(credit) Fair value adjustment

35
Q

new balance in FV adjst for TS

A

(debit) Fair value adjustement

credit) net unrealized holding g/l (IS

36
Q

HTM/AFS -> TS

A

unrealized g/l are recognized in current earnings

37
Q

TS -> HTM / AFS

A

all gains and losses already accounted for

38
Q

HTM -> AFS

A

no current income effect but unrealized in OCI

39
Q

AFS - > HTM

A

No current income effect, but amortize gains and losses in OCI with any bond premium/discount over remaining life of the security.

40
Q

Fair Value Option

A

unrealized gains and losses are recognized in the net income in the period which they occur. It is IRREVOCABLE.

41
Q

when HTM / AFS use Fair value option.

A

they become investing activities not operating

FA 322 (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions