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:

user

https://quizlet.com/102989718/investments-flash-cards/

user

https://quizlet.com/KidneySocks

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