Chapter 12 - TRUE/FALSE Flashcards Preview

Intermediate Accounting II > Chapter 12 - TRUE/FALSE > Flashcards

Flashcards in Chapter 12 - TRUE/FALSE Deck (23):
1

TRUE/FALSE
All investments in debt securities whose fair values are not readily determinable are carried at historical cost.

FALSE

2

TRUE/FALSE
Both debt and equity securities can be categorized as trading securities.

TRUE

3

TRUE/FALSE
Net unrealized holding gains (losses) are reported in the income statement for trading securities.

TRUE

4

TRUE/FALSE
Purchases and sales of securities are always reported as investing activities in a statement of cash flows.

FALSE

5

TRUE/FALSE
Routine transfers of debt and equity investments among the trading, available for sale, and held to maturity portfolios need not be disclosed in the financial statements.

FALSE

6

TRUE/FALSE
Both trading securities and securities available for sale are reported at their fair values.

TRUE

7

TRUE/FALSE
All securities considered available for sale should be reported as current assets in a classified balance sheet.

FALSE

8

TRUE/FALSE
Unrealized gains and losses are included in other comprehensive income for securities that are classified as available for sale.

TRUE

9

TRUE/FALSE
When available-for-sale securities are sold, the amount of gain or loss realized from the date of purchase is included in before-tax net income.

TRUE

10

TRUE/FALSE
Companies must always use the equity method when they hold between 25% and 50% of the common stock of an investee.

FALSE

11

TRUE/FALSE
The equity method is in many ways a partial consolidation.

TRUE

12

TRUE/FALSE
Under the equity method for accounting for a stock investment, cash dividends received are considered a reduction of the investee's net assets.

TRUE

13

TRUE/FALSE
When an equity method investment is sold, a gain or loss is recognized for the difference between its selling price and its cost.

FALSE

14

TRUE/FALSE
If an investment is accounted for under the equity method, the investor reduces the investment income and the investment account for amortization of goodwill acquired in the investment.

FALSE

15

TRUE/FALSE
Selecting the fair value option for an available-for-sale investment is equivalent to reclassifying the investment as a trading security.

TRUE

16

TRUE/FALSE
The fair value option cannot be elected for significant influence investments because those must be accounted for under the equity method.

FALSE

17

TRUE/FALSE
Under IAS No. 39, investments for which the investor lack significant influence use basically the same reporting classifications as those under U.S. GAAP.

TRUE

18

TRUE/FALSE
Under IFRS No. 9, investments for which the investor lacks significant influence use basically the same reporting classifications as those under U.S. GAAP.

FALSE

19

TRUE/FALSE
Under IFRS No. 9, debt investments are classified as either "available-for-sale" or "fair value through profit and loss (FVTPL)."

TRUE

20

TRUE/FALSE
Under IFRS No. 9, equity investments are classified as either "fair value through other comprehensive income (FVTOCI)" or "fair value through profit and loss (FVTPL)."

TRUE

21

TRUE/FALSE
Under IAS. No 39, transfers of debt investments out of the FVTPL category into AFS or HTM are permitted under "rare circumstances."

TRUE

22

TRUE/FALSE
Under IFRS No. 9, cost can be used as an estimate of fair value in some circumstances.

TRUE

23

TRUE/FALSE
Securities classified as held to maturity could be reported as either current or long-term in a classified balance sheet, depending upon their maturity dates.

TRUE