F.5 M.1

Question 1

Using fair value through net income to account for an investment in common stock Dividends this year exceeded the share of undistributed earnings. The amount of dividend revenues that should be reported in the investor’s income statement for the year would be.

Answer 1

The portion of the dividends received this year that were NOT in excess of the investor’s share of investee’s undistributed earnings since the date of investment.

Question 2

A company invested in marketable securities. At the year end fair value changed in this investment were included in the company’s other comprehensive income. How would the company classify this investment?

Answer 2

Unrealized gains and losses from marketing available for sale debt securities.

Question 3

What amount a company should record of debt securities at the end of the year?

Answer 3

Beg bal+ any additional during the year- unrealized loss (+unrealized gain net of tax).

Question 4

unrealized gain on debt investments go in which financial statement?

Answer 4

other comprehensive income

Question 5

CECL Model? the Current Expected Credit Loss model

Answer 5

the expected credit loss is equal to the difference between amortized cost and the present value of expected cash flows. The gain will be recorded on other comprehensive income.

Question 6

What is a debt security

Answer 6

a purchase of debt to provide interest returns

Question 7

calculate the present value of expected future cash flows for a bond that is classified as held to maturity.

Answer 7

Ordinary annuity rates (first one is principle the second interest)
Take the present value of face value at maturity
Find the present value of interest payments
Gain/Loss=amortized cost-present value

Question 8

for the bond investment the fair value is higher than the present value. All other values are higher than the bonds original cost to the company. How should this be recorded

Answer 8

record as a loss because amortized cost is above the present value.

Question 9

Based on the security available for sale with an amortized cost of $250,000 and current fair value of $218,000. What is the present value of expected cash flows.

Answer 9

Take the amortized cost- the credit loss recorded in the journal entry of 23,000.

Question 10

Where in the financial statements should a company disclose information about its concentration of credit risks?

Answer 10

The notes to the financial statements