Question : 61. Which of the following is/are not true? A. Securities available-for-sale that a : 1230367

61. Which of the following is/are not true? 
A. Securities available-for-sale that a firm intends to sell within one year appear in marketable securities in the current assets section of the balance sheet.
B. Securities not available-for-sale appear in investments in securities in noncurrent assets.
C. Acquisition and disposition of securities available-for-sale are usually investing activities on the statement of cash flows.
D. U.S. GAAP and IFRS require firms to report these securities at fair value on the balance sheet.
E. none of the above

62. Which of the following is not true regarding investments in securities available-for-sale? 
A. Firms initially record investments in securities available-for-sale at acquisition cost, including transaction costs.
B. If a firm classifies debt securities as available-for-sale, it must amortize any difference between the purchase price and the maturity value of the debt over the remaining term to maturity.
C. The amortization of any difference between the purchase price and the maturity value of the debt makes interest revenue on these debt securities differ from the cash receipts for debt service payments.
D. On the date of each balance sheet, firms measure securities classified as available-for-sale at fair value.
E. The difference between amortized cost for debt securities or the carrying value for equity securities and the fair value of these securities is a realized holding gain or loss.

63. Which of the following is not true regarding investments in securities available-for-sale?  
A. The unrealized holding gain or holding loss increases or decreases Other Comprehensive Income (a shareholders’ equity account).
B. The Other Comprehensive Income (a shareholders’ equity account) is closed to Accumulated Other Comprehensive Income (another shareholders’ equity account) at the end of the period.
C. The amortization of any difference between the purchase price and the maturity value of the debt makes interest revenue on these debt securities differ from the cash receipts for debt service payments.
D. Accumulated Other Comprehensive Income includes the sum of all increases and decreases in fair value of securities available-for-sale that have not yet appeared in net income.
E. Holding gains and losses on securities available-for-sale affect net income every accounting period.

64. Sarah Company

Sarah Company acquires common stock of Miriam Enterprises for $400,000 on November 1, 2009, and designates this investment as available-for-sale. The fair value of these shares is $435,000 on December 31, 2009. Sarah sells these shares on August 15, 2010, for $480,000.

The journal entries to record acquisition of securities available-for-sale on November 1, 2009 is 
A. Cash . . . . . . . . . . . . . . . . . . . . . .400,000
   Marketable Securities . . . . . . . . . . . . . .400,000
B. Cash . . . . . . . . . . . . . . . . . . . . . .400,000
   Common Stock . . . . . . . . . . . . .  .  .  . . 400,000
C. Common Stock . . . . . . . . . . . . . 400,000
   Cash . . . . . . . . . . . . . . . . . . . . .  . .        400,000
D. Marketable Securities . . . . . . . . 400,000
   Cash . . . . . . . . . . . . . . . . . . . . . . .         400,000
E. Marketable Securities . . . . . . . . 400,000
   Common Stock . . . . . . . . . . . . .  .  .  . . 400,000

65. Sarah Company

Sarah Company acquires common stock of Miriam Enterprises for $400,000 on November 1, 2009, and designates this investment as available-for-sale. The fair value of these shares is $435,000 on December 31, 2009. Sarah sells these shares on August 15, 2010, for $480,000.

The journal entries to measure securities available-for-sale on December 31, 2009.  
A. Unrealized Holding Gain on
  Securities Available-for-Sale…………….35,000
   Marketable Securities……………………………….35,000
B. Unrealized Holding Gain on
  Securities Available-for-Sale…………….35,000
   Common Stock………………………………………..35,000
C. Common Stock………………………………… 35,000
   Unrealized Holding Gain on
     Securities Available-for-Sale…………………..35,000 
D. Marketable Securities………………………. 35,000
   Cash…………………………………………………….. 35,000
E. Marketable Securities………………………  35,000
   Unrealized Holding Gain on
     Securities Available-for-Sale………………….35,000

66. Sarah Company

Sarah Company acquires common stock of Miriam Enterprises for $400,000 on November 1, 2009, and designates this investment as available-for-sale. The fair value of these shares is $435,000 on December 31, 2009. Sarah sells these shares on August 15, 2010, for $480,000.

The journal entries to record the sale of securities available-for-sale on August 15, 2009. 
A. Cash……………………………………………..480,000
Unrealized Holding Gain on
  Securities Available-for-Sale…………..35,000
   Marketable Securities………………………………435,000
   Realized Gain on Sale of Securities
     Available-for-Sale………………………………..   80,000
B. Marketable Securities……………………..435,000
Realized Gain on Sale of Securities
  available-for-sale…………………………..  80,000
   Cash……………………………………………………     480,000
   Unrealized Holding Gain on
     Securities Available-for-Sale………………….. 35,000
C. Cash……………………………………………. 480,000
Realized Holding Gain on
  Securities Available-for-Sale…………. 35,000
   Marketable Securities………………………………435,000
   Unrealized Gain on Sale of Securities
     available-for-sale…………………………………… 80,000
D. Marketable Securities……………………. 435,000
Unrealized Gain on Sale of Securities
  available-for-sale………………………….. 80,000
   Cash…………………………………………………….  480,000
   Realized Holding Gain on
     Securities Available-for-Sale………………….. 35,000
E. none of the above

67. Sarah Company

Sarah Company acquires common stock of Miriam Enterprises for $400,000 on November 1, 2009, and designates this investment as available-for-sale. The fair value of these shares is $435,000 on December 31, 2009. Sarah sells these shares on August 15, 2010, for $480,000.

The total income from the purchase and sale of these securities is _____ reported _____ 
A. $80,000; in the year of sale.
B. $80,000; as they occur.
C. $35,000; in the year of sale.
D. $35,000; as they occur.
E. $45,000; in the year of sale

68. Which of the following is/are true regarding securities classified as available-for-sale? 
A. they must be tested for impairment and if they are impaired, the firm treats the unrealized loss in Accumulated Other Comprehensive Income as if it were realized.
B. they must be tested for impairment and if they are impaired, the firm treats the unrealized loss in Net Income as if it were realized.
C. they are not tested for impairment and do not effect Accumulated Other Comprehensive Income.
D. they are not tested for impairment and do not effect Net Income.
E. they must be tested for impairment and if they are impaired, the firm treats the unrealized loss in Retained Earnings as if it were realized.

69. Dexter Company decides that an available-for-sale security is impaired as of December 31, 2009 and has an unrealized loss of $5,000. The journal entry to record an impairment loss on securities available-for-sale would be:  
A. Unrealized Holding Loss on
  Securities Available-for-Sale…………….5,000    
     Impairment Loss……………………………………5,000
B. Impairment Loss……………………………..  5,000
    Unrealized Holding Loss on
      Securities Available-for-Sale………………..  5,000
C. Realized Holding Loss on
  Securities Available-for-Sale…………….5,000    
     Impairment Loss…………………………………   5,000
D. Impairment Loss …………………………….  5,000
    Realized Holding Loss on
      Securities Available-for-Sale…………………5,000
E. Impairment Loss…………………………….   5,000
    Retained Earnings………………………………..  5,000

70. Which of the following is true?  
A. The required accounting for trading securities and for securities classified as available-for-sale differs with respect to the income statement but not with respect to the balance sheet.
B. The unrealized gain or loss on trading securities appears in net income in the period when fair value changes occur.
C. The unrealized holding gain or loss on securities available-for-sale appears in other comprehensive income period by period, and its cumulative amount resides in the Accumulated Other Comprehensive Income account on the balance sheet.
D. Users of the financial statements should be alert to this accounting effect in evaluating the profitability of firms with both trading securities and securities available-for-sale.
E. all of the above