Question : 31. U.S. GAAP and IFRS require firms to classify marketable securities : 1245735

31. 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

32. 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

33. 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.

34. 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.

35. 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

36. 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

37. 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

38. 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

39. 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.

40. A firm records debt securities purchased at the acquisition cost. The acquisition cost will differ from the _______ of the debt if the __________on the bonds differs from the required ________ on the bonds at the time the firm acquired them.  
A. market value; coupon rate; market yield
B. market value; discount rate; coupon yield
C. maturity value; coupon rate; market yield
D. maturity value; discount rate; market yield
E. maturity value; discount rate; coupon yield