Investments

Question 1

Any security representing a creditor relationship with an entity
Classified into:
Trading
AFS
Held-to-maturity

Answer 1

Debt securities

Question 2

include ownership interests (common, preferred,etc.), rights to acquire ownership interests (rights, warranats, options), and right to dipose of ownership interests (put options)

Answer 2

equity securities

Question 3

Securities that includes only debt securities and requires the positive intent and ability to hold the securities to maturity–carried at amortized cost using effective interest method

Answer 3

Held-to-Maturity Securities

Question 4

Debt and equity securities purchased and held principally for hte purpose gneratinggains on current resale –generally held by brokers, bankers, and other financial instiutions which engage in acive buyng and selling

Answer 4

Trading securities

Question 5

Debt and equity securities not categorized as either held-to-maturity or trading

Answer 5

Available for sale securities

Question 6

Method of accounting reuquired for investments which give teh investor the ability to exercise significant influence over the opearing and financial policies of the investee–ownership of 20% or more will typically result in this

Answer 6

Equity method

Question 7

The type of restatement required when changing from equity–> cost method or vice versa

Answer 7

Retroactive restatement