Marketable Securities

Question 1

Marketable Securites

Answer 1

Debt or Equity, publicly traded

Question 2

Marketable Securities Categorized based on…

Answer 2

MGMT’s intentions

Question 3

Trading Securities

Answer 3

debt or equity, stocks, options, warrants, debt instruments

Question 4

Trading Securities are classified where in the SOCF?

Answer 4

Operating

Question 5

Trading Securities are classified as what on the BS?

Answer 5

current assets

Question 6

Trading Securities are initially recorded at

Answer 6

cost, carried at FMV

Question 7

Available for Sale Securities

Answer 7

All investments in marketable debt or equity securities that do not meet the definition of HTM or Trading

Question 8

AFS Securities are reported where in the SOCF?

Answer 8

investing

Question 9

AFS Securities are reported in BS as?

Answer 9

Current or Non Current, date of sale

Question 10

Held to Maturity Investments

Answer 10

debt instruments only, investments in bonds or other debt instruments in which the investor has the INTENT and ABILITY to hold until the due date, adjust to target

Question 11

HTM are reported in BS as?

Answer 11

Non-Current unless 1 year from due date

Question 12

HTM

Answer 12

initially recorded @ cost

Question 13

HTM

Answer 13

difference b/w cost and maturity value is amortized over life of security`

Question 14

AFS Impairment Loss - other than temporary recognized where?

Answer 14

decline in value other than temporary- recognized in income

Question 15

AFS Impairment Loss other than temporary

Answer 15

amount of impairment will be difference b/w original cost and declined value which it is not expected to recover

Question 16

AFS Impairment Loss other than temporary is reported where?

Answer 16

Reclassed out of OCI, recognized in income, once written down, no recoveries are allowed

Question 17

Impairment Other Than temporary qualifications for Equity Securities

Answer 17

1) series of operating losses 2) inability of an investee to maintain an earnings capacity that is sufficient to justify a carrying value 3) if investor intends to sell investment before value is recovered, considered non temporary and realized in period in which decision has been made to sell investment

Question 18

Impairment other than temporary for Debt Securities

Answer 18

If entity intends to sell the security, non-temp loss is considered to have occurred, does not intend to sell- non temp loss will be recognized if it is more likely than not entity will be required to sell before value is recovered.

Question 19

Intrinsic Value

Answer 19

Market Price - Strike Price (Exercise Price)