acct 3120 ch 12

The fair value option described by SFAS No. 159: A. Must be elected when a security is purchased, and is incredible B. Can be traded on exchanges, similar to other options C. For debt is available only if anticipated to not be held to maturity D. Is not available for equity investments

A. Must be elected when a security is purchased, and is irrevocable

Unrealized holding gains and losses for securities available are: A. Reported as a separate component of the shareholders' equity section of the balance sheet B. Included in the determination of income from operations in the period of the change C. Reported as extraordinary items D. Not reported in the income statement nor the balance sheet

A. Reported as a separate component of the shareholders' equity section of the balance sheet

Unrealized holding gains and losses are included in an investor's earnings for: Trading Securities Securities Available-For-Sale A. Yes No B. Yes Yes C. No Yes D. No No

A. Yes No

Unrealized holding gains and losses for trading securities are: A. Reported as a separate component of the shareholders' equity section of the balance sheet B. Included in the Determination of income from operations in the period of the change C. Reported as extraordinary items D. Not reported in the income statement nor the balance sheet

B. Included in the Determination of income from operations in the period of the change

The accounting for unrealized holding gains and losses will be different if the fair value option is elected for all of the following types of investments except: A. Held-to-maturity B. Trading Security C. Available-for-sale D. Equity Method

B. Trading Security

Investment securities are reported on a balance sheet at fair value for: Trading Securities Securities Available-For-Sale A. Yes No B. Yes Yes C. No Yes D. No No

B. Yes Yes

When applying the equity method, an investor should report dividends from the investee as: A. Dividend revenue B. An extraoadinary item C. A reduction in the investment account D. An increase in the investment account

C. A reduction in the investment account

Unrealized holding gains and losses for securities to be held-to-maturity are: A. Reported as a separate component of the shareholders' equity section of the balance sheet B. Included in the determination of income from operations in the period of the change. C. Reported as extraordinary items D. Not reported in the income statement nor the balance sheet

D. Not reported in the income statement nor the balance sheet

The equity method is used when an investor can't control, but can exercise significant influence over the operating and financial policies of the investee. We presume, in absence of evidence to the contrary, that this is so if: A. The investor classifies the investment as available-for-sale B. The investor classifies the investment as held-to-maturity C. The investor owns between 51% or more of the investee's voting shares D. The investor owns between 20% and 50% of the investee's voting shares

D. The investor owns between 20% and 50% of the investee's voting shares

Western Manufacturing Company owns 40% of the outstanding common stock of Eastern Supply Company. During 2018, Western received a $50 million cash dividend from Eastern. What effect did this dividend have on Western's 2018 financial statements? A. total liabilities increased B. Total Assets decreases C. Net income increased D. Total Assets are unchanged

D. Total Assets are unchanged