Investments

Question 1

How are Available-For-Sale securities recorded on the Balance Sheet?

Answer 1

At Fair value as either Current or Non-current assets.

Question 2

How are Available-For-Sale security Unrealized G/L treated?

Answer 2

Included in OCI (Other Comprehensive Income)

Question 3

How are Unrealized G/L for Available-For-Sale securities that are reclassified to Held-to-Maturity or Trading Securities treated?

Answer 3

HTM - Stockholder’s Equity
/ Trading Securities - Current Period.

Question 4

How are Held-to-Maturity securities recorded on the Balance Sheet?

Answer 4

Amortized cost as Current or Non-current assets.

If reclassified as AFS - Unrealized G/L go to Stockholder’s Equity

If reclassified as Trading Securities - Unrealized G/L recognized in Current Period

Question 5

How are Held-to-Maturity securities Unrealized G/L treated?

Answer 5

Trick question - Unrealized gains or losses are not applicable because they are HTM

Question 6

How are Trading Securities recorded on the Balance Sheet?

Answer 6

At Fair Value as a Current Asset

Unrealized gains/losses are recorded on the Income Statement

If they are reclassified as held-to-maturity or available-for-sale- there is no effect upon transfer.

Question 7

How are Trading Securities Unrealized G/L treated?

Answer 7

Recorded on the Income StatementIf they are reclassified as HTM or AFS - there is no effect upon transfer.

Question 8

Type of equity securities

Answer 8

“trading securities
available for sale
held to maturity”

Question 9

IFRS classifies marketable securities as..

Answer 9

“financial assets at FV through profit or loss

available for sale and held to maturity”

Question 10

When a stock dividend is received…….

Answer 10

a memorandum entry is made that reduces the unit cost of all stock owned.

Question 11

Equity securities-

Answer 11

securities that represent an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices

Question 12

Trading securities are

Answer 12

current assets

Question 13

Trading securities (definition)

Answer 13

debt and equity securities bought and held for the purpose of selling them in the near term

Question 14

Available for sale securities are

Answer 14

non-current assets

Question 15

Available for sale securities-

Answer 15

are those securities (both debt and equity) that don’t meet the definitions of the other 2 classifications (held to maturity and trading)

Question 16

Held to Maturity Securities are

Answer 16

non current assets

Question 17

Held to maturity securities apply to __________ securities only

Answer 17

debt

Question 18

Held to Maturity Securities (definition)

Answer 18

debt securities are classified as held-to-maturity only if the corporation has the positive intent and ability to hold these securities to maturity

Question 19

What are the IFRS guidelines for an investment classified as a “financial asset at fair value through profit or loss”

Answer 19

classified as held for trading AND asset is designated as an investment at FV through profit or loss using the fair value option

Question 20

How are trading and available for sale securities valued?

Answer 20

fair value

Question 21

What is the fair value of a security?

Answer 21

It is the market price of the security or what a willing buyer and seller would pay and accept to exchange the security

Question 22

Changes in the fair value of a trading security results in

Answer 22

unrealized holding gains and losses

Question 23

Changes in the fair value of available for sale securities results in

Answer 23

unrealized holding gains and losses

Question 24

Unrealized holding gains and losses for Trading Securities are included in

Answer 24

earnings

Question 25

What statement do unrealized gains/losses from Trading Securities show up on?

Answer 25

Income statement

Question 26

Unrealized holding gains and losses for Available for Sale Securities are reported in

Answer 26

other comprehensive income

Question 27

IFRS Available for Sale Exception

Answer 27

unrealized gain/losses are included in OCI except for foreign exchange gains/losses on A4S DEBT securities (go directly on income statement). Foreign exchange A4S EQUITY securities are included in OCI

Question 28

Held to Maturity Securities are valued at

Answer 28

amortized cost

Question 29

Any transfer of a particular security from one group to another group is accounted for at

Answer 29

fair value

Question 30

Reclassification FROM trading security

Answer 30

the unrealized gain/loss at the date of transfer is already recognized in earnings and shall not be reversed

Question 31

Reclassification TO trading category-

Answer 31

the gain/loss at the date of transfer shall be recognized in the earnings immediately

Question 32

Debt security classified as held to maturity transferred to available for sale

Answer 32

the gain/loss shall be reported in OCI

Question 33

Debt Security Classified as available for sale transferred to held to maturity

Answer 33

gain/loss already reported in OCI and the unrealized holding gain/loss shall be amortized over the remaining life of the security

Question 34

Bond investments which are intended to be held until the maturity date are classified as __________ securities

Answer 34

held to maturity

Question 35

Investments in marketable equity securities which a company does not intend to sell in the near term should be classified as

Answer 35

available for sale

Question 36

Unrealized gains and losses on available-for-sale securities should be reported as a

Answer 36

separate component of other comprehensive income

Question 37

Carrying amount equals

Answer 37

amortized cost

Question 38

Long-term held-to-maturity securities are reported at

Answer 38

the carrying amount (amortized cost)

Question 39

Short-term held-to-maturity securities are reported at

Answer 39

the carrying amount (amortized cost)

Question 40

When an available-for-sale security is determined to be impaired because of an other than temporary decline in fair value below cost- the asset must be written down to? Where is it recognized?

Answer 40

the lower fair value. recognized on the income statement

Question 41

Under IFRS unrealized gain/losses on Available-for-sale securities are reported in OCI EXCEPT for

Answer 41

foreign exchange gains/losses on A4S debt securities

Question 42

Under IFRS foreign exchange gain loss on Available-for-sale DEBT securities are reported

Answer 42

directly on the income statement

Question 43

Under IFRS gains/losses on foreign exchange available -for-sale EQUITY securities are reported

Answer 43

in other comprehensive income

Question 44

Where are Realized gains/losses on available-for-sale reported?

Answer 44

income statement

Question 45

Unrealized gain/losses on available-for-sale securities are reported

Answer 45

in other comprehensive income

Question 46

Consolidated financial statements are under the accounting concept of

Answer 46

economic entity