Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Chapter A2, Problem 12MCQ

When the market value of a company’s available-for-sale securities is lower than its cost, the difference should be:

a. shown as a liability.

b. shown as a valuation allowance added to the historical cost of the investments.

c. shown as a valuation allowance subtracted from the historical cost of the investments.

d. No entry is made, the securities are shown at historical cost.

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(i). Debt investments not plan to sell reported at    a. amortized cost. b. fair value. c. the lower of amortized cost of fair value. d. net realizable value.     (ii). which of the following caa be reported at fair value?   a. Debt investments. b. Equity investments. c. Both debt and equity investments: d None of these answers' choices are correct.
choose the correct answer: Equity security acquired for trading should be measured at reporting date a. cost, being the purchase price b. cost, being the purchase price plus transaction costs c. fair value, with change in FV taken through profit or loss. d. fair value, with change in FV taken through other comprehensive income.
1. On reporting date, they are measured at market value.2. Initially measured at purchase price, which is the fair value at purchase date.3. Initially recognized at purchase price plus transaction costs.4. Generally, dividends received or receivable are recorded as dividend revenue.5. Change in fair value is not recognized unless there is permanent impairment in value.6. Dividends received are reported as a decrease in the carrying amount of the investment.7. Impairment loss and reversal of impairment are not separately accounted for.8. Bonus issue is not separately recognized in a formal accounting entry.9. Any difference between the cost of investment and the share i the fair value of the net identifiable assets is amortized and is considered an adjustment to the recognized income from this investment.10. At the date of the disposal of the securities, the equity account accumulated in other comprehensive income may be transferred to another equity account.11. The income recognized in…
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