acct 326 stuff

Von Company properly applies the equity method in accounting to its investment in Neumann Inc. Which of the following statements are correct?

-V has significant influence over N -V owns 20-50% of N's voting shares

Which of the following conditions must be present for a debt security to be classified as HTM?

-investor intends to hold the security until maturity -investor has the ability to hold the security until maturity

Discount on bond investment:

-reduces the carrying value of the bond to its cost at date of purchase -is a contra-asset account

Place the three steps necessary to assess and address OTT impairment losses relating to investments in the correct order:

1. determine if the investment is impaired 2. determine whether any impairment is other than temporary 3. determine how to report the impairment

20-50% ownership

Apply equity method

HTM

Carried at amortized cost and unrealized holding gains and losses are not recognized

Trading Securities

Carried at fair value and unrealized holding gains and losses are recognized in net income

Available to Sale

Carried at fair value and unrealized holding gains and losses are recognized in other comprehensive income

Investments that are properly classified as HTM should be carried at:

amortized cost

less than 20% ownership

apply fair value through net income method

More than 50% owership

consolidation

Holding gains and losses associated with investments properly classified as HTM are:

not recognized

If a bond sells for more than its maturity value, the bond sells at a ___________

premium

Interest received is calculated based on the ________interest rate

stated

Jonas Financial Institution buys and sells debt securities frequently to maximize short-term gains to market value. Jonas would classify its portfolio as:

trading securities