Statement 1: If the financial asset is measured at fair value through profit or loss, transaction costs directly attributable to the acquisition are expensed immediately when incurred. Statement 2: Trading bond investments are reported at fair value. A. Only statement 1 is true B. Only statement 2 is true C. Both statements are true D. Both statements are false

Statement 1: If the financial asset is measured at fair value through profit or loss, transaction costs directly attributable to the acquisition are expensed immediately when incurred. Statement 2: Trading bond investments are reported at fair value. A. Only statement 1 is true B. Only statement 2 is true C. Both statements are true D. Both statements are false

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 11MC: Which of the following would trigger a subtraction in the indirect operating section? A. gain on...

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4. Statement 1: In the sale of a financial asset measured at fair value through OCI, the difference between the selling price and the carrying amount is recorded as a gain or loss on sale of investment. Statement 2: When the fair value of a financial asset measured at fair value through OCI is higher than its carrying amount, an unrealized loss-OCI is debited. a. Only statement 1 is true b. Only statement 2 is true c. Both statements are true d. Both statements are false
TRUE OR FALSE 7.If the financial asset is held for trading or if the financial asset is measured at fair value through profit or loss, transaction costs are expensed outright. 8.Significant influence is the power to participate in the financial and operating policy decisions of the investee entity but not control or joint control over those policies. 9.Amortization of discount decreases the accounts Investment in Bonds and Interest Income. 10.Amortization of premium increases the accounts Investment in Bonds and Interest Income.
S1: Bond investments classified and accounted for as financial asset at amortized cost are recognized initially at fair value plus transaction costs that are directly attributable to the acquisition. S2: Transaction costs attributable to the acquisition of bond investments held for trading or at fair value through profit or loss are expensed immediately. O Only S1 is TRUE O Only S2 is TRUE Both statements are TRUE O Both statements are FALSE
6. Statement 1: Unrealized gains or losses from financial assets measured at fair value through OCI are closed to Retained Earnings at the end of the accounting period. Statement 2: If a company’s business model for debt investment is achieved by collecting contractual cash flows and by selling the financial asset, such investment should be designated as a financial asset measured at amortized cost. a. Only statement 1 is true b. Only statement 2 is true c. Both statements are true d. Both statements are false
Statement 1. Bonds held for the purpose of accruing profit due to changes in fair value are classified as fair value asset. The changes in fair value of bonds are recognized in the income statement. Statement 2: Bonds held for the purpose of collecting contractual cash flows are classified as financial assets at amortized cost. The changes in fair value of bonds are ignored. Both statements are trueBoth statements are falseStatement 1 only is trueStatement 2 only is true Statement 1: Under the equity method of accounting, the maximum investor’s share in the loss of the investee is the carrying amount of investment balance. Statement 2: An investor shall discontinue to use the equity method from the date that the investor ceases to have significant influence over the investee. Both statements are true Both statements are falseStatement 1 only is trueStatement 2 only is true
Statement 1: Acquisition of premiums increases the total asset account of the entity. Statement 2: Premiums are classified as current asset instead of a current liability. Only the first statement is correct. Neither of the statement is correct. Only the second statement is correct. Both statements are correct.
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S1: A property acquired by issuing equity shares should be recorded at fair value of the asset received. S2: A property acquired by issuing bonds payable should be recorded at fair value of the asset received. O Only S1 is TRUE O Only S2 is TRUE Both statements are TRUE Both statements are FALSE
(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.
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