Question :
111. U.S. GAAP and IFRS require firms to account for debt : 1245719
111. U.S. GAAP and IFRS require firms to account for debt securities designated as held to maturity at _____ except that they are also subject to _____. That is, firms do not recognize increases in fair value (unrealized gains) but might recognize decreases in fair value(unrealized losses).
A. amortized cost; impairment
B. present value; depreciation
C. net realizable value; impairment
D. amortized cost; destruction
E. net realizable value; depreciation
112. U.S. GAAP and IFRS require firms to account for debt securities designated as held to maturity by not recognizing _____ but might recognize _____.
A. increases in fair value (unrealized gains); decreases in fair value (unrealized losses)
B. decreases in fair value (unrealized losses); increases in fair value (unrealized gains)
C. increases in future value (unrealized gains); decreases in future value (unrealized losses)
D. decreases in future value (unrealized losses); increases in future value (unrealized gains)
E. increases in future value (realized gains); decreases in future value (realized losses)
113. 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
114. The counter-argument for (1) not measuring held-to-maturity debt securities at amortized cost and (2) recognizing most changes in fair value during the contractual term of the debt include any change in the _____ could change the investor’s willingness or ability to hold the securities until maturity.
A. economic circumstances
B. interest rates
C. investor’s need for cash
D. credit risk of the borrower
E. all of the above
115. The argument for measuring held-to-maturity debt securities at amortized cost and ignoring most changes in fair value during the contractual term of the debt is/are
A. changes in fair value are not relevant if the firm has the intention and ability to hold the securities to maturity.
B. firms would recognize impairment losses because of conservatism.
C. firms would recognize impairment losses because of impairments due to changes in default risk that reflect changes in the amount the investor is likely to receive.
D. all of the above
E. none of the above
116. 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
117. 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
118. 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.
119. The firm’s purpose for holding certain securities may change, requiring it to transfer securities from one category to another. The firm transfers the securities at _____ at the time of the transfer.
A. future value
B. net realizable value
C. amortized cost
D. fair value
E. present value of future cash flows
120. Which of the following is/are 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
