Unrealized holding gains or losses which are recognized in income are from securities classified as
a. held-to-maturity.
b. available-for-sale.
c. trading.
d. None of these answers are correct.
Answer: trading
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Accounting Chapter 17
- Transfers between categories
- "Gains trading" or "cherry picking" involves
- A debt security is transferred from one category to another. Generally acceptable accounting principles require that for this particular reclassification (1) the security be transferred at fair value at the date of transfer, and (2) the unrealized gain or loss at the date of transfer currently carried as a separate component of stockholders' equity be amortized over the remaining life of the security. What type of transfer is being described?
- When an investment in an available-for-sale security is transferred to trading because the company anticipates selling the stock in the near future, the carrying value assigned to the investment upon entering it in the trading portfolio should be
- When an investment in a held-to-maturity security is transferred to an available-for-sale security, the carrying value assigned to the available-for-sale security should be
- A reclassification adjustment is reported in the
- The fair value option allows a company to
- Dublin Company holds a 30% stake in Club Company which was purchased in 2015 at a cost of $3,000,000. After applying the equity method, the Investment in Club Company account has a balance of $3,040,000. At December 31, 2015 the fair value of the investment is $3,120,000. Which of the following values is acceptable for Dublin to use in its balance sheet at December 31, 2015?
- Judd, Inc., owns 35% of Cosby Corporation. During the calendar year 2014, Cosby had net earnings of $300,000 and paid dividends of $30,000. Judd mistakenly recorded these transactions using the fair value method rather than the equity method of accounting. What effect would this have on the investment account, net income, and retained earnings, respectively?
- Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the
- Koehn Corporation accounts for its investment in the common stock of Sells Company under the equity method. Koehn Corporation should ordinarily record a cash dividend received from Sells as
- If the parent company owns 90% of the subsidiary company's outstanding common stock, the company should generally account for the income of the subsidiary under the
- When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following statements applies?
- An investor has a long-term investment in stocks. Regular cash dividends received by the investor are recorded as
- Santo Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods?
- When a company has acquired a "passive interest" in another corporation, the acquiring company should account for the investment
- Which of the following is not generally correct about recording a sale of a debt security before maturity date?
- When investments in debt securities are purchased between interest payment dates, preferably the
- Which of the following is correct about the effective-interest method of amortization?
- APB Opinion No. 21 specifies that, regarding the amortization of a premium or discount on a debt security, the
- An available-for-sale debt security is purchased at a discount. The entry to record the amortization of the discount includes a
- Investments in debt securities should be recorded on the date of acquisition at
- Jordan Company purchased ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. One step in calculating the issue price of the bonds is to multiply the principal by the table value for
- Investments in debt securities are generally recorded at
- In accounting for investments in debt securities that are classified as trading securities,
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