Question : 21. The provisions of U.S. GAAP require firms to classify marketable : 1230363

21. The provisions of U.S. GAAP require firms to classify marketable securities into which categories? 
A. Debt securities held to maturity for which a firm has both the intent and the ability to hold to maturity—shown on the balance sheet at an amount based on acquisition cost, but subject to impairment.
B. Debt and equity securities held as trading securities shown on the balance sheet at fair value, with changes in fair value of securities held at the end of the accounting period reported each period in net income.
C. Debt and equity securities held as securities available-for-sale shown on the balance sheet at fair value, with unrealized changes in fair value of securities held at the end of the accounting period included in other comprehensive income, and realized changes in fair value included in net income when a firm sells the securities.
D. all of the above
E. choices a and b, only.

22. The provisions of U.S. GAAP require firms to classify marketable securities into the following categories except 
A. debt securities held to maturity for which a firm has both the intent and the ability to hold to maturity—shown on the balance sheet at an amount based on acquisition cost, but subject to impairment.
B. debt and equity securities held as trading securities shown on the balance sheet at fair value, with changes in fair value of securities held at the end of the accounting period reported each period in net income.
C. debt and equity securities held as securities available-for-sale shown on the balance sheet at fair value, with unrealized changes in fair value of securities held at the end of the accounting period included in other comprehensive income, and realized changes in fair value included in net income when a firm sells the securities.
D. debt and equity securities held as securities available-for-sale shown on the balance sheet at fair value, with changes in fair value of securities held at the end of the accounting period reported each period in net income.
E. none of the above

23. The provisions of IFRS require firms to classify marketable securities into which of the following categories? 
A. Held to maturity investments for which a firm has both the intent and the ability to hold to maturity—shown on the balance sheet at an amount based on acquisition cost, but subject to impairment.
B. Debt and equity securities held as financial assets at fair value through profit or loss, shown on the balance sheet at fair value, with changes in fair value of securities held at the end of the accounting period reported each period in net income.
C. 3. Debt and equity securities held as available-for-sale financial assets, shown on the balance sheet at fair value, with unrealized changes in fair value of securities held at the end of the accounting period included in other comprehensive income, and realized changes in fair value included in net income when a firm sells the securities.
D. all of the above
E. choices a and b, only.

24. The provisions of IFRS require firms to classify marketable securities into which of the following categories except 
A. held to maturity investments for which a firm has both the intent and the ability to hold to maturity—shown on the balance sheet at an amount based on acquisition cost, but subject to impairment.
B. debt and equity securities held as financial assets at fair value through profit or loss, shown on the balance sheet at fair value, with changes in fair value of securities held at the end of the accounting period reported each period in net income.
C. debt and equity securities held as available-for-sale financial assets, shown on the balance sheet at fair value, with unrealized changes in fair value of securities held at the end of the accounting period included in other comprehensive income, and realized changes in fair value included in net income when a firm sells the securities.
D. debt and equity securities held as available-for-sale financial assets, shown on the balance sheet at fair value, with changes in fair value of securities held at the end of the accounting period reported each period in net income.
E. choices a and b, only.

25. Alex Corporation acquires securities classified as marketable securities for $10,000. The entry is as follows:  
A. Cash………………………………………………………….10,000
   Marketable Securities………………………………………….10,000
B. Marketable Securities………………………………….10,000
     Bonds Payable………………………………………………..10,000
C. Marketable Securities………………………………….10,000
     Common Stock……………………………………………….10,000
D. Marketable Securities………………………………….10,000
     Cash………………………………………………………………10,000
E. Bonds Payable……………………………………………10,000   
   Marketable Securities…………………………………………10,000

26. The investor recognizes dividends on equity securities as revenue when the 
A. dividend amounts are received in cash, only.
B. firm’s board of directors declares dividends, only.
C. dividend accrues over time, only.
D. dividend accrues over time and the dividend amounts are received in cash, only.
E. none of the above

27. The investor recognizes interest on debt securities when  
A. interest amounts are received in cash, only.
B. firm’s board of directors declares interest, only.
C. interest accrues over time.
D. firm’s board of directors declares interest and the interest amounts are received in cash, only.
E. none of the above

28. Barry Corporation holds equity securities earning $250 through dividend declarations and debt securities earning $300 from interest earned and that it has not yet received these amounts in cash. The entry is as follows:  
A. Dividend Revenue……………………………………..250
Interest Revenue………………………………………..300  
   Dividends and Interest Receivable…………………………550 
B. Dividend Revenue……………………………………..250
Interest Revenue………………………………………..300  
   Dividends and Interest Payable……………………………..550 
C. Dividends and Interest Receivable……………… 550 
  Dividend Revenue………………………………………………..250
  Interest Revenue…………………………………………………..300
D. Dividends and Interest Payable……………………550 
  Dividend Revenue………………………………………………..250
  Interest Revenue…………………………………………………..300
E. Dividends and Interest Payable……………………550 
  Dividends and Interest Receivable………………………….550

29. DPC, an electric utility, has $100 million of bonds payable outstanding that mature in five years. The utility acquires U.S. government securities whose periodic interest payments and maturity value exactly equal those on the utility’s outstanding bonds. The firm intends to use the cash received from the government bonds to make required interest and principal payments on its own bonds. The electric utility could also have used its cash to purchase its bonds in the marketplace. Based on the above, DPC should treat these securities as  
A. debt securities held as securities available-for-sale.
B. debt securities held as trading securities.
C. debt securities held to maturity.
D. equity securities held as trading securities.
E. equity securities held as securities available-for-sale.

30. U.S. GAAP and IFRS require firms to measure marketable securities for which firms have an intent and ability to hold to maturity at  
A. acquisition cost.
B. amortized acquisition cost.
C. maturity value of the debt.
D. fair value of the debt.
E. redemption value of the debt.