Financial Reporting II Chapter 12 LearnSmart
interest, principal
Bonds typically provide two sources of cash flow to investors. These are associated with the payment of _____________ and ____________
false
True or False The following conditions must be present for a debt security to be classified as "Held-TO-Maturity," -The investment can be classified as a current asset
other comprehensive
Unrealized holdings gains and losses on available-for-sale securities affect _______________ ________________ income.
cost
an investment in trading securities is initially recorded at:
fair value
at the end of the accounting period, trading securities must be adjusted to __ __
interest, principal
bonds typically provide two sources of cash flows to investors. these are associated with the payment of __________ and __________.
HTM, AFS, TS
classifications possible for investments in which the investor does not exert significant influence
net income, equity, owners
comprehensive income includes __ __, as well as all other changes in __ that do not arise from transactions with others
other comprehensive income
current period holding gains or losses
investment revenue
dividends received on an investment in trading securities are credited to __ __
20, 50
for __ to __ % ownership, apply the equity method
20
for less than __% ownership, company does not exert significant influence over investee; classify and report as AFS or trading investment
50
for more than __% ownership, issue consolidated financial statements
income
gains and losses arising from the sale of HTM securities must be recognized as part of:
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discount
if a bond sells for less than its maturity value, the bond sells at a ___
other comprehensive income
match the total with the correct balance sheet account "Accumulated oither comprehensive income"
net income
match the total with the correct balance sheet account "retained earning"
accumulated other comprehensive income
net fair value adjustments to date-Not holding gains and losses to date
control, significant influence, no significant influence or control
possible categories for the purpose of classifying investments in the stock of another company
net income
realized gains and losses from the sale of AFS securities
asset
the discount on bond investments account is a contra __ account
stated interest rate, par value
what information is necessary to calculate cash interest each period?
debt
what type of securities can be classified as HTM? pg. 656
amounts directly associated with the investment
when AFS securities are sold, the realized gain or loss is calculated as the difference between the cash received and the:
other comprehensive income
A company purchases securities and classifies them as AFS securities; how should they recognize changes in the value of the investment?
trading securities
Motivation to realize short-term gains, and frequently and active trading.......................Jones Financial Institution buys and sells securities frequently to maximize short-term gains in market value. Jones should classify its portfolio as:
true
True or False The following conditions must be present for a debt security to be classified as "Held-TO-Maturity," -The investor has the ability to hold the security until maturity.
true
True or False The following conditions must be present for a debt security to be classified as "Held-TO-Maturity," -the investor intends to hold the security until maturity
false
True or False The following conditions must be present for a debt security to be classified as "Held-TO-Maturity," -the maturity data is less than 90 days from the date of purchase.
consolidated
if an investor controls the operating and financial policies of another entity, it should issue __ financial statements
outstanding debt balance, effective interest rate
information necessary to calculate interest revenue each period. pg. 657
outstanding, effective
interest earned on investments in debt instruments is calculated by multiplying the __ balance of the investment with the __ interest rate. pg. 657
amortized value, effective
interest revenue earned on an investment in trading debt securities is calculated based on the __ __ times the __ interest rate
market
interest revenue is calculated based on the __ interest rate
amortized cost, effective interest rate
investment revenue on debt securities classified as AFS securities is calculated using: Pg. 665
amortized cost
investments classified as HTM, for which the fair value option is not chosen, are reported at: pg. 655
fair value
investments classified as trading securities are reported at:
market
investors utilize the __ interest rate to value the stream of cash flows associated with bond investments
3.5
otto company purchases 200k face about, 8% semi-annual bonds when the market rate is 7%. The rate used to determine interest revenue for the first 6 months on the investment is:
fair market value
securities that are classified as AFS or trading are valued at:
influence
the factor that determines accounting for investments is the __ that the investor has over the investee
HTM, AFS
the fair value option can be applied to investments classified __ and ___ securities
financial assets, financial liabilities
the fair value option can be applied to: (but not shareholder's equity) pg. 672
unrealized
the key difference between the three investment categories lies in the reporting of __ gains and losses
present, future
the price of a bond is equal to the __ value of the __ cash receipts
equity
Winston Company has signiticant influence over the operating and financial policies of Xavier Company; Winston should report its investment utilizing this method
