f5

Question 1

Unrealized gains and losses on available-for- sale (AFS) securitiees are recorded in

Answer 1

OCI (net of tax)

Question 2

trading securities are held at

Answer 2

fairvalue in balance sheet

Question 3

unrealzied gains and losses from trading securities are recognized in

Answer 3

earnings

Question 4

the current expected credit losses (CECL) model requires recording a loss when the amortized cost exceeds

Answer 4

the present value of expected future cash flows

Question 5

Equity method is used when

Answer 5

when the company has significant control over company (usually 20%-50%)

Question 6

Whenever a company gains significant influence of a company when is the equity method recognized

Answer 6

from the date acquired

Question 7

When consolidating financial statements what is eliminated?

Answer 7

100% of all inter company balances among members of the consolidated group are eliminated

Question 8

How do you calculate the consolidated equity account

Answer 8

Parent company equity account plus non-controlling interest

Question 9

two methods when admission of a new partner

Answer 9

bonus method
goodwill method

Question 10

bonus method

Answer 10

when the purchase price is more or less than the book value of the capital account purchased, bonuses are adjusted between the old and new partners capital accounts and do not affect partnership assets

Question 11

goodwill method

Answer 11

goodwill is recognized based upon the total value of the partnership implied by the new partners contribution.

Question 12

When an intracompany transfer takes place a fixed asset cost is based on the

Answer 12

original cost from the outside world and remains the same on the consolidated financial statements.

Question 13

Dividend revenue, under the fair value method, should be recognized to the extent of

Answer 13

cumulative earnings since acquisition and return of capital beyond that point.

Question 14

intraperiod income tax allocation is shown:

Answer 14

net of tax

Question 15

deferred tax expense is due to temporary differences between

Answer 15

GAAP and tax accounting

Question 16

deferred tax expense =

Answer 16

increase in deferred tax liability - increased in deferred tax asset

Question 17

effective tax rate =

Answer 17

income tax expense / pretax income

Question 18

When taxable income > pre tax income this means?

Answer 18

it’s a deferred tax asset

Question 19

When taxable income < pretax income this means?

Answer 19

it’s a deferred tax liability

Question 20

assets contributed by a partnership to a corporation in its formation are valued at the assets

Answer 20

FMV less any liabilities assumed by the corporation.
Stock issued is credited at par value and any difference is credited to APIC

Question 21

when recording dividend recognition under the FV method it should be recognized to the extent of cumulative earning since

Answer 21

acquisition and return of capital beyond that point

Question 22

under the equity method the investor records revenue to its

Answer 22

“share of the investee’s earnings” not dividends received

Question 23

under equity method dividends reduce the

Answer 23

carrying value of the investment

Question 24

In the sale of securities you should include the

Answer 24

commission and sale taxes associated

Question 25

The fv method issued used whenever 20% or less is owned by an investee the investment will be carried in

Answer 25

FV thorugh net income. Earnings are not recorded and dividends are considered income and don’t afecr the income statement

Question 26

supplemental disclosure of reconciliation of net income to net cash is provided on when the

Answer 26

direct method is used under US GAAP