Question : 111. U.S. GAAP requires firms holdingtrading securities to report unrealized holding : 1230348

111. U.S. GAAP requires firms holdingtrading securities to report unrealized holding gains and losses on the investments 
A. in the income statement.
B. as an adjustment to the Capital stock section of the balance sheet.
C. in the footnotes to the financial statements.
D. as an adjustment to the Treasury stock section of the balance sheet.
E. none of the above

112. U.S. GAAP classifies securities that are neither debt securities held to maturity or trading securities as 
A. securities available-for-sale.
B. securities held for short term profit potential.
C. securities held for speculation.
D. securities held for speculation.
E. derivative securities.

113. A financial instrument that obtains its value from some other financial item is known as a(n) 
A. clone
B. mutual fund
C. derivative
D. stock exchange
E. underlying

114. Derivatives include 
A. an option to purchase a share of stock.
B. a commitment to purchase a certain amount of foreign currency in the future.
C. interest rate, foreign exchange rate, and commodity price hedges.
D. all of the above
E. none of the above

115. Which of the following is not a derivative? 
A. forward foreign exchange contract
B. swap contract
C. forward commodity contract
D. a share of nonconvertible preferred stock
E. Eurodollar future

116. Which of the following is a characteristic of a derivative? 
A. has one or more underlyings
B. has one or more notional amounts
C. exchanging of promises with a counterparty
D. all of the above
E. none of the above

117. Which of the following is a characteristic of a derivative? 
A. has one or more underlyings
B. has one or more notional amounts
C. exchanging of promises with a counterparty
D. require or permit a net settlement
E. all of the above

118. The U.S. GAAP and IASB require that firms record derivatives on the balance sheet date at 
A. historical cost.
B. fair value.
C. amortized acquisition cost.
D. future value of present cash flows.
E. present value of future cash flows.

119. Gains and losses on effective cash flow hedges are reported initially in 
A. accumulated other comprehensive income.
B. contributed capita.
C. net income.
D. an adjustment to the beginning balance of retained earnings.
E. an adjustment to the ending balance of retained earnings.

120. Gains and losses on speculative securities, fair value hedges, and the ineffective portion of cash flow hedges are included in 
A. accumulated other comprehensive income each period.
B. contributed capital each period.
C. net income each period.
D. an adjustment to the beginning balance of retained earnings.
E. an adjustment to the ending balance of retained earnings.

121. Cash flow hedges are revalued to market value each period and gains and losses from changes in the market values of such derivatives appears 
A. in accumulated other comprehensive income each period to the extent the financial instrument is “highly effective” in neutralizing the risk and the remainder in (current) net income.
B. in the Contributed capital section each period to the extent the financial instrument is “highly effective” in neutralizing the risk and the remainder in net income currently.
C. in net income each period regardless of effectiveness.
D. in retained earnings each period regardless of effectiveness.
E. in reserves for contingencies each period regardless of effectiveness.

122. A fair value hedge 
A. is a derivative instrument acquired to hedge exposure to changes in the fair value of an asset or liability.
B. must be revalued each period and the resulting gain or loss is reflected in contributed capital each period.
C. is not revalued each period with no recognition given of the resulting gain or loss in earnings.
D. must be accounted for under the lower of cost or market principles.
E. must be revalued each period and the resulting gain or loss is reflected in reserves for contingencies each period.