Accounting Review #2

Eilert Construction Company had a contract starting April 2021, to construct a $42,000,000 building that is expected to be completed in September 2022, at an estimated cost of $38,500,000. At the end of 2021, the costs to date were $17,710,000 and the estimated total costs to complete had not changed. The progress billings during 2021 were $8,400,000 and the cash collected during 2021 was $5,600,000. Eilert uses the percentage-of-completion method. At December 31, 2021, Eilert would report Construction in Process in the amount of a. $19,320,000. b. $17,710,000. c. $16,520,000. d. $ 1,610,000.

a. $19,320,000.

Kiner, Inc. began work in 2021 on a contract for $21,000,000. Other data are as follows 2021 2022 Costs incurred to date $9,000,000 $14,000,000 Estimated costs to complete 6,000,000 - Billings to date 7,000,000 21,000,000 Collections to date 5,000,000 18,000,000 If Kiner uses the percentage-of-completion method, the gross profit to be recognized in 2021 is a. $3,600,000. b. $4,000,000. c. $5,400,000. d. $6,000,000.

a. $3,600,000.

Harrison Company owns 20,000 of the 50,000 outstanding shares of Taylor, Inc. common stock. During 2021, Taylor earns $1,200,000 and pays cash dividends of $960,000. Harrison should report investment revenue for 2021 of a. $480,000. b. $384,000. c. $96,000. d. $0.

a. $480,000.

Completed by Probability July 31, 2021 65% August 7, 2021 25% August 14, 2021 5% August 21, 2021 5% The transaction price for this transaction using the expected value is a. $995,000 b. $950,000 c. $652,500 d. $685,000

a. $995,000

Which of the following temporary differences results in a deferred tax asset in the year the temporary difference originates? I. Accrual for product warranty liability. II. Subscriptions received in advance. III. Prepaid insurance expense. a. I and II only. b. II only. c. III only. d. I and III only.

a. I and II only.

Machinery was acquired at the beginning of the year. Depreciation recorded during the life of the machinery could result in Future Future Taxable Amounts Deductible Amounts a. Yes Yes b. Yes No c. No Yes d. No No

a. Yes Yes

Seadrill Engineering licensed software to oil-drilling firms for 5 years. In addition to providing the software, the company also provides consulting services and support to ensure smooth operation of the software. The total transaction price is $420,000. Based on standalone values, the company estimates the consulting services and support have a value of $120,000 and the software license has a value of $300,000. Assuming the performance obligations are not interdependent and licensed software is delivered and consulting service will be provided over 5 years, the journal entry to record the transaction includes a. a credit to Sales Revenue for $300,000 and a credit to Unearned Service Revenue of $120,000. b. a credit to Service Revenue of $120,000. c. a credit to Unearned Service Revenue of $300,000. d. a credit to Sales Revenue of $420,000.

a. a credit to Sales Revenue for $300,000 and a credit to Unearned Service Revenue of $120,000.

The cost-to-cost basis measures progress towards completion by a. comparing costs incurred to date with total costs to complete the contract. b. tracking results of work completed to date, it is an output measure. c. tracking floors of a building completed versus floors still to be completed. d. tracking miles of a highway completed versus miles of highway still to be completed

a. comparing costs incurred to date with total costs to complete the contract.

The third step in the process for revenue recognition is to a. determine the transaction price. b. identify the separate performance obligations in the contract. c. allocate transaction price to the separate performance obligations. d. recognize revenue when each performance obligation is satisfied.

a. determine the transaction price.

If a contract involves a significant financing component, a. the time value of money is used to determine the fair value of the transaction. b. the time value of money is not required to determine transaction price, if the payment is scheduled to occur in more than a year. c. the transaction amount should be based on the current sales price of goods or services. d. interest must be accrued on the current sales price of goods or services.

a. the time value of money is used to determine the fair value of the transaction.

Santo Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods? Fair Value Method Equity Method a.No Effect Decrease b.Increase Decrease c.No Effect No Effect d.Decrease No Effect

a.No Effect Decrease

Koehn Corporation accounts for its investment in the common stock of Sells Company under the equity method. Koehn Corporation should ordinarily record a cash dividend received from Sells as a.a reduction of the carrying value of the investment. b.additional paid-in capital. c.an addition to the carrying value of the investment. d.dividend income.

a.a reduction of the carrying value of the investment.

An available-for-sale debt security is purchased at a discount. The entry to record the amortization of the discount includes a a.debit to Debt Investments. b.debit to the discount account. c.debit to Interest Revenue. d.None of these answers are correct.

a.debit to Debt Investments.

Debt securities that are accounted for at amortized cost, not fair value, are a.held-to-maturity debt securities. b.trading debt securities. c.available-for-sale debt securities. d.never-sell debt securities.

a.held-to-maturity debt securities.

Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses are a.securities where a company has holdings of less than 20%. b.securities where a company has holdings of more than 20%. csecurities where a company has holdings of between 20% and 50%. d.securities where a company has holdings of more than 50%.

a.securities where a company has holdings of less than 20%.

Patton Company purchased $1,500,000 of 10% bonds of Scott Company on January 1, 2021, paying $1,410,375. The bonds mature January 1, 2031, interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity. For the year ended December 31, 2021, Patton Company should report interest revenue from the Scott Company bonds of a. $158,970. b. $155,283. c. $155,130. d. $150,000.

b. $155,283.

Kraft Company made the following journal entry in late 2021 for rent on property it leases to Danford Corporation. Cash 150,000 Unearned Rent Revenue 150,000 The payment represents rent for the years 2022 and 2023, the period covered by the lease. Kraft Company is a cash basis taxpayer. Kraft has income tax payable of $230,000 at the end of 2021, and its tax rate for next two years is 25%. What amount of income tax expense should Kraft Company report at the end of 2021? a. $117,500 b. $192,500 c. $211,250 d. $267,500

b. $192,500

On its December 31, 2020 balance sheet, Calhoun Company appropriately reported a $10,000 debit balance in its Fair Value Adjustment account. There was no change during 2021 in the composition of Calhoun's portfolio of debt investments held as available-for-sale debt securities. The following information pertains to that portfolio Security Cost Fair value at 12/31/21 X $130,000 $160,000 Y 100,000 90,000 Z 175,000 125,000 $405,000 $375,000 What amount of unrealized loss on these debt securities should be included in Calhoun's stockholders' equity section of the balance sheet at December 31, 2021? a. $40,000. b. $30,000. c. $20,000. d. $0.

b. $30,000.

Pretax accounting income $4,500,000 Excess tax depreciation (225,000) Taxable income $4,275,000 The excess tax depreciation will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 30% in 2021, 25% in 2022 and 2023, and 20% in 2024. The total deferred tax liability to be reported on Gentry's balance sheet at December 31, 2021, is a. $67,500. b. $52,500. c. $56,250. d. $45,000

b. $52,500.

Richman Company purchased $1,200,000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1,249,896 at an effective interest rate of 7%. Using the effective interest method, Richman Company decreased the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $4,248 and $4,392, respectively. At February 1, 2022, Richman Company sold the Carlin bonds for $1,236,000. After accruing for interest, the carrying value of the Carlin bonds on February 1, 2022 was $1,240,500. Assuming Richman Company has a portfolio of available-for-sale debt investments, what should Richman Company report as a gain (or loss) on the bonds? a. $0. b. ($4,500). c. ($26,244). d. ($35,244).

b. ($4,500).

At December 31, 2021, Atlanta Company has an equity portfolio valued at $160,000. Its cost was $132,000. If the Securities Fair Value Adjustment has a debit balance of $8,000, which of the following journal entries is required at December 31, 2021? a. (Dr)Fair Value Adjustment 28,000 (Cr)Unrealized Holding Gain or Loss-Income 28,000 b. (Dr)Fair Value Adjustment 20,000 (Cr)Unrealized Holding Gain or Loss-Income 20,000 c. (Dr)Unrealized Holding Gain or Loss-Income 28,000 (Cr)Fair Value Adjustment 28,000 d. (Dr)Unrealized Holding Gain or Loss-Income 20,000 (Cr)Fair Value Adjustment 20,000

b. (Dr)Fair Value Adjustment 20,000 (Cr)Unrealized Holding Gain or Loss-Income 20,000

At the beginning of 2021, Pitman Co. purchased an asset for $1,800,000 with an estimated useful life of 5 years and an estimated salvage value of $150,000. For financial reporting purposes the asset is being depreciated using the straight-line method for tax purposes the double-declining-balance method is being used. Pitman Co.'s tax rate is 20% for 2021 and all future years. At the end of 2021, which of the following deferred tax accounts and balances is reported on Pitman's balance sheet? Account _ Balance a. Deferred tax asset $78,000 b. Deferred tax liability $78,000 c. Deferred tax asset $117,000 d. Deferred tax liability $117,000

b. Deferred tax liability $78,000

Which of the following are temporary differences that are normally classified as expenses or losses that are deductible after they are recognized in financial income? a. Prepaid expenses that are deducted on the tax return in the period paid. b. Product warranty liabilities. c. Depreciable property. d. Fines and expenses resulting from a violation of law.

b. Product warranty liabilities.

The Billings on Construction in Progress account is a(n) a. contract revenue account. b. inventory account. c. contra-inventory account. d. construction expense account.

c. contra-inventory account.

Chapter 19 Taxable income of a corporation a. differs from accounting income due to differences in intraperiod allocation between the two methods of income determination. b. differs from accounting income because companies use the full accrual method for financial reporting but use the modified cash basis for tax reporting. c. is based on generally accepted accounting principles. d. is reported on the corporation's income statement.

b. differs from accounting income because companies use the full accrual method for financial reporting but use the modified cash basis for tax reporting.

When a company has an obligation or right to repurchase an asset for an amount greater than or equal to its selling price, the transaction should be treated as a a. outright sale. b. financing transaction. c. repurchase transaction. d. put option.

b. financing transaction.

Recognition of tax benefits in the loss year due to a loss carryforward requires a. the establishment of a deferred tax liability. b. the establishment of a deferred tax asset. c. the establishment of an income tax refund receivable. d. only a note to the financial statements.

b. the establishment of a deferred tax asset.

Hopkins Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows Pretax financial income $3,000,000 Estimated litigation expense 4,000,000 Extra depreciation for taxes (6,000,000) Taxable income $ 1,000,000 The estimated litigation expense of $4,000,000 will be deductible in 2020 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2,000,000 in each of the next three years. The income tax rate is 20% for all years. The amount of deferred tax liability to be recognized is a. $800,000 b. $600,000 c. $1,200,000 d. $1,000,000

c. $1,200,000

On August 5, 2021, Famous Furniture shipped 40 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $350 each. The cost of shipping the dining sets amounted to $3,600 and was paid for by Famous Furniture. On December 30, 2021, the consignee reported the sale of 30 dining sets at $850 each. The consignee remitted payment for the amount due after deducting a 6% commission, advertising expense of $600, and installation and setup costs of $780. The amount cash received by Famous furniture is a. $25,500 b. $23,970 c. $22,590 d. $23,370

c. $22,590

Operating income and tax rates for C.J. Company's first three years of operations were as follows Income Enacted tax rate 2020 $400,000 25% 2021 ($1,000,000) 20% 2022 $1,680,000 30% Assuming that C.J. Company opts only to carryforward its 2021 NOL, what is the amount of deferred tax asset or liability that C.J. Company would report on its December 31, 2021 balance sheet? Amount Deferred tax asset or liability a. $200,000 Deferred tax liability b. $250,000 Deferred tax liability c. $300,000 Deferred tax asset d. $200,000 Deferred tax asset

c. $300,000 Deferred tax asset

Mitchell Corporation prepared the following reconciliation for its first year of operations Pretax financial income for 2021 $ 1,800,000 Tax exempt interest (150,000) Originating temporary difference (350,000) Taxable income $1,300,000 The temporary difference will reverse evenly over the next two years at an enacted tax rate of 20%. The enacted tax rate for 2021 is 30%. In Mitchell's 2021 income statement, what amount should be reported for total income tax expense? a. $590,000 b. $530,000 c. $460,000 d. $390,000

c. $460,000

Mathis Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows Pretax financial income $ 1,200,000 Estimated litigation expense 3,000,000 Installment sales (2,400,000) Taxable income $ 1,800,000 The estimated litigation expense of $3,000,000 will be deductible in 2022 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1,200,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1,200,000 current and $1,200,000 noncurrent. The income tax rate is 20% for all years. The deferred tax liability to be recognized is a. $120,000. b. $360,000. c. $480,000. d. $240,000.

c. $480,000

Harrison Company owns 20,000 of the 50,000 outstanding shares of Taylor, Inc. common stock. During 2021, Taylor earns $1,200,000 and pays cash dividends of $960,000. If the beginning balance in the investment account was $750,000, the balance at December 31, 2021 should be a. $1,230,000. b. $990,000. c. $846,000. d. $750,000.

c. $846,000.

Taxable income of a corporation differs from pretax financial income because of Permanent Temporary Differences Differences a. No No b. No Yes c. Yes Yes d. Yes No

c. Yes Yes

On November 1, 2021, Green Valley Farm entered into a contract to buy a $150,000 harvester from John Deere. The contract required Green Valley Farm to pay $150,000 in advance on November 1, 2021. The harvester (cost of $110,000) was delivered on November 30, 2021. The journal entry to record the contract on November 1, 2021 includes a a. credit to Accounts Receivable for $150,000. b. credit to Sales Revenue for $150,000. c. credit to Unearned Sales Revenue for $150,000. d. debit to Unearned Sales Revenue for $150,000.

c. credit to Unearned Sales Revenue for $150,000.

Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2021. Estimated standalone fair values of the equipment, installation, and training are $90,000, $60,000, and $30,000 respectively. The transaction price allocated to equipment, installation and training is Meyer & Smith will have a journal entry to record the transaction on March 15, 2021 that includes a a. credit to Sales Revenue for $144,000. b. debit to Unearned Service Revenue of $30,000. c. credit to Unearned Service Revenue of $24,000. d. credit to Service Revenue of $60,000.

c. credit to Unearned Service Revenue of $24,000.

Noncash consideration should be a. recognized on the basis of fair value of what is given up. b. recognized on the basis of original cost paid by customer. c. recognized on the basis of fair value of what is received. d. recognized on the basis of fair value of equivalent goods or services.

c. recognized on the basis of fair value of what is received.

When a change in the tax rate is enacted into law, its effect on existing deferred income tax accounts should be a. handled retroactively in accordance with the guidance related to changes in accounting principles. b. considered, but it should only be recorded in the accounts if it reduces a deferred tax liability or increases a deferred tax asset. c. reported as an adjustment to income tax expense in the period of change. d. applied to all temporary or permanent differences that arise prior to the date of the enactment of the tax rate change, but not subsequent to the date of the change.

c. reported as an adjustment to income tax expense in the period of change.

On August 1, 2021, Dambro Company acquired 1,200, $1,000, 9% bonds at 97 plus accrued interest. The bonds were dated May 1, 2018, and mature on April 30, 2027, with interest paid each October 31 and April 30. The bonds will be added to Dambro's available-for-sale portfolio. The preferred entry to record the purchase of the bonds on August 1, 2021 is a.Debt Investments 1,191,000 Cash 1,191,000 b.Debt Investments 1,164,000 Interest Receivable 27,000 Cash 1,191,000 c.Debt Investments 1,164,000 Interest Revenue 27,000 Cash 1,191,000 d.Debt Investments 1,200,000 Interest Revenue 27,000 Discount on Debt Investments 36,000 Cash 1,191,000

c.Debt Investments 1,164,000 (D) Interest Revenue 27,000 (C)Cash 1,191,000

Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses that are included as other comprehensive income and as a separate component of stockholders' equity are a.held-to-maturity debt securities. b.trading debt securities. c.available-for-sale debt securities. d.never-sell debt securities.

c.available-for-sale debt securities.

Unrealized holding gains or losses which are recognized in income are from debt securities classified as a.held-to-maturity. b.available-for-sale. c.trading. d.None of these answers are correct.

c.trading.

On June 1, 2021, Johnson & Sons sold equipment to James Landscaping Service in exchange for a zero-interest bearing note with a face value of $110,000, with payment due in 12 months. The fair value of the equipment on the date of sale was $100,000. The amount of revenue to be recognized on this transaction in 2021 is a. $110,000. b. $10,000 c. $100,000 d. $100,000 sales revenue and $5,833 interest revenue.

d. $100,000 sales revenue and $5,833 interest revenue.

Patton Company purchased $1,500,000 of 10% bonds of Scott Company on January 1, 2021, paying $1,410,375. The bonds mature January 1, 2031 interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Patton Company should increase its Debt Investments account for the Scott Company bonds by a. $8,970. b. $5,140. c. $4,485. d. $2,571.

d. $2,571.

Eckert Corporation's partial income statement after its first year of operations is as follows Income before income taxes $3,750,000 Income tax expense Current $1,035,000 Deferred 90,000 (1,125,000) Net income $2,625,000 Eckert uses the straight-line method of depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The amount charged to depreciation expense on its books this year was $2,800,000. No other differences existed between book income and taxable income except for the amount of depreciation. Assuming a 20% tax rate, what amount was deducted for depreciation on the corporation's tax return for the current year? a. $2,350,000 b. $1,125,000 c. $2,800,000 d. $3,250,000

d. $3,250,000

Richman Company purchased $1,200,000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1,249,896 at an effective interest rate of 7%. Using the effective interest method, Richman Company decreased the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $4,248 and $4,392, respectively. At December 31, 2021, the fair value of the Carlin, Inc. bonds was $1,272,000. What should Richman Company report as other comprehensive income and as a separate component of stockholders' equity? a. $0 b. $8,640 c. $22,104 d. $30,744

d. $30,744

On January 3, 2020, Moss Company acquires $500,000 of Adam Company's 10-year, 10% bonds at a price of $532,090 to yield 9%. Interest is payable each December 31. The bonds are classified as held-to-maturity. Assuming that Moss Company uses the effective-interest method, what is the amount of interest revenue that would be recognized in 2021 related to these bonds? a. $50,000 b. $53,208 c. $47,890 d. $47,698

d. $47,698

Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2021. Estimated standalone fair values of the equipment, installation, and training are $90,000, $60,000, and $30,000 respectively. The transaction price allocated to equipment, installation and training is a. $90,000, $60,000, $30,000 respectively b. $48,000, $48,000, $48,000 respectively c. $144,000 for the entire bundle. d. $72,000, $48,000 and $24,000 respectively.

d. $72,000, $48,000 and $24,000 respectively.

Hopkins Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows Pretax financial income $3,000,000 Estimated litigation expense 4,000,000 Extra depreciation for taxes (6,000,000) Taxable income $ 1,000,000 The estimated litigation expense of $4,000,000 will be deductible in 2020 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2,000,000 in each of the next three years. The income tax rate is 20% for all years. The deferred tax asset to be recognized is a. $200,000. b. $400,000. c. $600,000. d. $800,000.

d. $800,000.

Pretax financial income $3,000,000 Estimated litigation expense 4,000,000 Extra depreciation for taxes (6,000,000) Taxable income $ 1,000,000 The estimated litigation expense of $4,000,000 will be deductible in 2020 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2,000,000 in each of the next three years. The income tax rate is 20% for all years. Income taxes payable is a. $0. b. $200,000. c. $600,000. d. $900,000.

d. $900,000.

During 2021 Logic Company purchased 10,000 shares of Midi, Inc. for $30 per share. During the year Logic Company sold 2,500 shares of Midi, Inc. for $35 per share. At December 31, 2021 the market price of Midi, Inc.'s stock was $28 per share. What is the total amount of realized and unrealized gain/(loss) that Logic Company will report in its income statement for the year ended December 31, 2021 related to its investment in Midi, Inc. stock? a. ($20,000) b. $12,500 c. ($7,500) d. ($2,500)

d. ($2,500)

An example of a permanent difference is a. proceeds from life insurance on officers. b. interest revenue on municipal bonds. c. insurance expense for a life insurance policy on officers. d. All of these answers are correct as they are all examples of permanent differences.

d. All of these answers are correct as they are all examples of permanent differences.

Which of the following differences would result in future taxable amounts? a. Expenses or losses that are tax deductible after they are recognized in financial income. b. Revenues or gains that are taxable before they are recognized in financial income. c. Revenues or gains that are recognized in financial income but are never included in taxable income. d. Expenses or losses that are tax deductible before they are recognized in financial income.

d. Expenses or losses that are tax deductible before they are recognized in financial income.

A company uses the equity method to account for an investment for financial reporting purposes. This would result in what type of difference and in what type of deferred income tax? Type of Difference Deferred Tax a. Permanent Asset b. Permanent Liability c. Temporary Asset d. Temporary Liability

d. Temporary Liability

When a customer purchases a product but is not yet ready for delivery, this is referred to as a. a repurchase agreement. b. a consignment. c. a principal-agent relationship. d. a bill-and-hold arrangement

d. a bill-and-hold arrangement

Companies can use the expected value to estimate variable consideration when a. the contract has only two possible outcomes. b. a company has a small number of contracts with similar characteristics. c. a company can use the most likely amount in a range of possible outcomes. d. a company has a large number of contracts with similar characteristics.

d. a company has a large number of contracts with similar characteristics.

Revenue from a contract with a customer a. is recognized when the customer receives the rights to receive consideration. b. is recognized even if the contract is still wholly unperformed. c. can be recognized even when a contract is still pending. d. cannot be recognized until a contract exists.

d. cannot be recognized until a contract exists.

A company has satisfied its performance obligation when the a. company has received payment for goods or services. b. company has significant risks and rewards of ownership. c. company has legal title to the asset. d. company has transferred physical possession of the asset.

d. company has transferred physical possession of the asset.

Consigned goods are recognized as revenues by the a. consignor when a sale to a third party has occurred. b. consignor when the merchandise has been shipped to a consignee. c. consignee when a sale to a third party has occurred. d. consignor when it receives payment from consignee for goods sold.

d. consignor when it receives payment from consignee for goods sold.

A major distinction between temporary and permanent differences is a. permanent differences are not representative of acceptable accounting practice. b. temporary differences occur frequently, whereas permanent differences occur only once. c. once an item is determined to be a temporary difference, it maintains that status however, a permanent difference can change in status with the passage of time. d. temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse.

d. temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse.

Which of the following is not correct in regard to trading debt securities? a.They are held with the intention of selling them in a short period of time. b.Unrealized holding gains and losses are reported as part of net income. c.Any discount or premium is amortized. d.All of these choices are correct.

d.All of these choices are correct.