F4/M1 Financial Instruments Flashcards
Financial instrument disclosures
- Concentration of credit risk
- Fair Values of financial instruments
- Market risk (Changes in economic circumstances) is encouraged, but NOT required
(T/F): Put option is the right to dispose of ownership shares at a certain price
True
(T/F): Redeemable preferred stock is a type of debt security, not equity security
True
(T/F): Stock warrants, stock options, and put options are equity securities
True
(T/F): Trading securities and AFS securities can be both debt or equity
True; only Held To Maturity can be solely debt
(T/F): Cash Flows from sale of Trading Securities are Operating activities, where as Cash Flows from AFS securities are Investing Activities
True
(T/F): Unrealized G/L on AFS Securities go on OCI (Direct to equity)
True; “U” in PUFE
(T/F): In order to classify a security as Held to Maturity, the company must have the intent and ability to do so
True; must have intent and ability
JE - Unrealized Loss on Trading Security
Cr: Unrealized loss on Trading Security
Dr: Valuation Account
JE - Unrealized Loss on AFS Security
Cr: Unrealized loss on AFS Security (Direct to equity)
Dr: Valuation account
(T/F): Held To Maturity securities are reported at Amortized Cost and there are no unrealized Gains or Losses
True; FMV is a distractor
(T/F): Any transfer of a security to another classification of securities is accounted for at fair value
True
(T/F): When you go from Trading to any other type of security, the G/L has already been accounted for in earnings so no adjustment is necessary
True
(T/F): When you go to Trading from any other security classification, record the adjustment in earnings
True
(T/F): When you go to AFS from HTM, record G/L in OCI
True
