Question : 51. For financial reporting purposes, acquisition and disposition of trading securities : 1230366

51. For financial reporting purposes, acquisition and disposition of trading securities are usually _____ activities.  
A. nonoperating
B. financing
C. investing
D. operating
E. exchange

52. U.S. GAAP and IFRS require firms to report trading securities at _____ 
A. net realizable value on the balance sheet.
B. fair value on the balance sheet.
C. present value on the balance sheet.
D. fair value on the income statement.
E. present value on the income statement.

53. Which of the following is/are true regarding reporting trading securities at fair value on the balance sheet. 
A. Active securities markets provide objective measures of fair values for trading securities.
B. Fair values provide financial statement users with the most relevant information for assessing the success of a firm’s trading activities over time
C. U.S. GAAP and IFRS require firms to report trading securities at fair value on the balance sheet.
D. all of the above
E. none of the above

54. GAAP and IFRS require firms to report trading securities at fair value on the balance sheet. The income statement reports the debit (loss) for decreases in the fair value and the credit (gain) for increases in the fair value of trading securities in an account with a title such as  _____. 
A. Realized Holding Loss (or Gain or Gains and Losses, net) on Long-Term Securities
B. Unrealized Holding Loss (or Gain or Gains and Losses, net) on Short-term Securities
C. Realized Holding Loss (or Gain or Gains and Losses, net) on Trading Securities
D. Unrealized Holding Loss (or Gain or Gains and Losses, net) on Trading Securities.
E. Realized Holding Loss (or Gain or Gains and Losses, net) on Short-Term Securities.

55. Braithwaite Insurance

Braithwaite Insurance acquired shares of Moon Macrosystems’ common stock on December 28, 2009, for $400,000 and classified them as trading securities. The fair value of these securities on December 31, 2009, was $402,000. Braithwaite Insurance sold these shares on January 3, 2010, for $405,000.

(Refer to the Braithwaite Insurance) The journal entries to record acquisition of trading securities on December 28, 2009.  
A. Cash…………………………………………….. 400,000 
   Marketable Securities……………………………….400,000
B. Other Comprehensive Income…………..400,000
   Marketable Securities……………………………….400,000
C. Marketable Securities……………………..400,000
   Other Comprehensive Income………………….. 400,000
D. Marketable Securities……………………..400,000
   Cash……………………………………………………….400,000
E. Marketable Securities……………………..400,000
   Net Income……………………………………………..400,000

56. Braithwaite Insurance

Braithwaite Insurance acquired shares of Moon Macrosystems’ common stock on December 28, 2009, for $400,000 and classified them as trading securities. The fair value of these securities on December 31, 2009, was $402,000. Braithwaite Insurance sold these shares on January 3, 2010, for $405,000.

(Refer to the Braithwaite Insurance)  The journal entries to measure trading securities at fair value and recognize unrealized holding gain in net income on December 31, 2009. 
A. Cash…………………………………………………2,000 
   Marketable Securities……………………………….2,000
B. Other Comprehensive Income……………..2,000
   Marketable Securities……………………………….2,000
C. Marketable Securities…………………………2,000
   Other Comprehensive Income……………………2,000
D. Marketable Securities…………………………2,000
   Unrealized Holding Gain on
     Trading Securities………………………………….2,000
E. Marketable Securities…………………………2,000
   Realized Holding Gain on
    Trading Securities…………………………………..2,000

57. Braithwaite Insurance

Braithwaite Insurance acquired shares of Moon Macrosystems’ common stock on December 28, 2009, for $400,000 and classified them as trading securities. The fair value of these securities on December 31, 2009, was $402,000. Braithwaite Insurance sold these shares on January 3, 2010, for $405,000.

(Refer to the Braithwaite Insurance)  The journal entries to record the sale of trading securities at a gain on January 3, 2010.  
A. Cash………………………………………………………..405,000 
   Marketable Securities………………………………………….402,000
   Realized Gain on Sale of Trading Securities……………..3,000
B. Marketable Securities………………………………  402,000
Realized Gain on Sale of Trading Securities…… 3,000
   Cash………………………………………………………………..   405,000 
C. Cash……………………………………………………..    405,000 
   Marketable Securities………………………………………… 402,000
   Unrealized Gain on Sale of Trading Securities…………. 3,000
D. Marketable Securities…………………………………402,000
Unrealized Gain on Sale of Trading Securities….3,000
   Cash……………………………………………………………….   405,000
E. Cash……………………………………………………….  405,000 
   Marketable Securities………………………………………….402,000
   Realized Gain on Sale of
     Securities Held to Maturity………………………………….  3,000

58. Braithwaite Insurance

Braithwaite Insurance acquired shares of Moon Macrosystems’ common stock on December 28, 2009, for $400,000 and classified them as trading securities. The fair value of these securities on December 31, 2009, was $402,000. Braithwaite Insurance sold these shares on January 3, 2010, for $405,000.

The total income from the purchase and sale of these securities is 
A. $5,000
B. $4,000
C. $3,000
D. $2,000
E. $1,000

59. Measurement of trading securities at _____ reflects income when it occurs in the form of a change in _____, not when the investor realizes a gain or loss _____.  
A. fair value; fair value; at the time of sale
B. net realizable value; fair value; at the time of sale
C. net realizable value; future value; in Other Comprehensive Income
D. realizable value; future value; in Other Comprehensive Income
E. future value; future value; in Other Comprehensive Income

60. U.S. GAAP and IFRS require firms to classify marketable securities that are neither debt securities held to maturity nor trading securities as _____.  
A. derivative securities
B. noncurrent securities
C. securities not available-for-sale
D. securities available-for-sale
E. marketing making securities