FAR 3B Flashcards
Both transfers from held-to-maturity to held-for-trading classifications and from held-for-trading to held-to-maturity classifications can occur in the accounting for investments where the investor…
does not have significant influence over the investee.
A marketable equity security is transferred from the held for trading portfolio to the available-for-sale portfolio. At the transfer date, the security’s cost exceeds its market value. What amount is used at the transfer date to record the security in the available-for-sale portfolio?
Market value, regardless of whether the decline in market value below cost is considered permanent or temporary.
Redeemable preferred stock is not considered…
an equity security for investment accounting purposes.
Accounting identifies three levels of influence that an investor may have over an investee. Those levels are:
(1) no significant influence (2) significant influence (3) control
An investor may elect to use fair value to account for or measure some investments that otherwise would be accounted for using…
amortized cost or the equity method. An investor is not required to use fair value to account for most investments.
The fair value method is least likely to be used to report an investment in a…
corporate joint venture.
Shared control is a central characteristic of…
a joint venture.
Stock dividends are not recognized in the accounts at receipt, at fair value or any other value. Rather, they…
reduce the cost per share under both the cost and equity methods.
An investor records a stock dividend received by…
a memorandum entry to increase the number of shares owned.
What is not a factor to take into consideration when determining if the decline in fair value of an equity security is other-than-temporary?
The length of time the holder has held the security
When the decline in fair value is considered to be other-than-temporary, the unrealized losses in OCI are…
reclassified to earnings.
Under IFRS, an entity that acquires an intangible asset may use the revaluation model for subsequent measurement only if:
An active market exists for the intangible asset.
Under IFRS, the test for asset impairment is to compare the carrying value of the intangible asset to its recoverable amount. Which of the following is the recoverable amount according to IFRS?
The greater of fair value less cost to sell or value in use.
After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Under IFRS, what is true about subsequent reversal of a previously recognized impairment loss?
It is allowed when events and circumstances change.
