Module 22.6: Marketable Securities

Question 1

Under US GAAP, debt securities that are intended to held to maturity are measured at?

Is it the same for IFRS?

Answer 1

Amortized cost, meaning the original issue price minus any principal payments, plus any amortized discount or minus any amortized premium, minus any impairment losses.

Changes in market value are ignored

Yes, same for IFRS

Question 2

Under US GAAP, debt securities labeled “trading securities” are debt securities acquired with the intent to sell them over the near term. How are they measured?

Answer 2

reported on balance sheet at fair value and gains and losses are recognized on the income statement.

Derivative instruments are also held the same way.

Question 3

Under US GAAP, debt securities labeled as “available for sale” are measured by…?

Answer 3

reported on balance sheet at fair value, however any unrealized gains or loss go through other comprehensive income and hit equity.

Question 4

Under IFRS, you can measure equity securities through other comprehensive income. Can you do the same through GAAP?

Answer 4

NO

Question 5

Under IFRS you can make the irrevocable choice to carry any asset through fair value on P&L, can you do the same for GAAP?

Answer 5

NO

Question 6

How are long term liabilities reported?

Answer 6

Amortized cost, however, some instances where they’re reported as fair value such as held-for-trading, derivative liabilities, or non-derivative liabilities.

Question 7

How are deferred tax liabilities created?

Answer 7

when the amount of income tax recognized in the income statement is greater than taxes payable.