ACC356 Final Complete Questions And Answers
A correct valuation for debt securities is ANS held-to-maturity at amortized cost.
Which of the following securities could be classified as held-to-maturity? ANS Municipal bonds
Unrealized holding gains or losses that are recognized in income are from debt securities classified as ANS
trading
Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses
as other comprehensive income and as a separate component of stockholders' equity are ANS available-for-sell
debt securities
Which of the following is NOT correct concerning trading securities? ANS All these choices are correct:
* They are held with the intention of selling them in a short period of time
* Unrealized holding gains and losses are reported as part of net income
* Any discount or premium is amortized
Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or
losses are ANS Securities where a company has holding of less than 20%
KFG Corporation purchased a 2% interest in the stock of Granger Company as part of its equity securities portfolio.
Concerning this investment, KFG will report ANS a current asset on its balance sheet, and dividend revenue and
unrealized holding gains and losses on its income statement
Santo Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt
of those dividends affect the investment account of the investor under each of the following accounting methods?
ANS Fair value method: No effect
Equity Method: Decrease
When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following
statements applies? ANS The investor should use the equity method to account for its investment unless
circumstances indicate that it is unable to exercise "significant influence" over the investee
A correct valuation for debt securities is ANS held-to-maturity at amortized cost.
Which of the following securities could be classified as held-to-maturity? ANS Municipal bonds
Unrealized holding gains or losses that are recognized in income are from debt securities classified as ANS
trading
Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses
as other comprehensive income and as a separate component of stockholders' equity are ANS available-for-sell
debt securities
Which of the following is NOT correct concerning trading securities? ANS All these choices are correct:
* They are held with the intention of selling them in a short period of time
* Unrealized holding gains and losses are reported as part of net income
* Any discount or premium is amortized
Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or
losses are ANS Securities where a company has holding of less than 20%
KFG Corporation purchased a 2% interest in the stock of Granger Company as part of its equity securities portfolio.
Concerning this investment, KFG will report ANS a current asset on its balance sheet, and dividend revenue and
unrealized holding gains and losses on its income statement
Santo Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt
of those dividends affect the investment account of the investor under each of the following accounting methods?
ANS Fair value method: No effect
Equity Method: Decrease
When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following
statements applies? ANS The investor should use the equity method to account for its investment unless
circumstances indicate that it is unable to exercise "significant influence" over the investee
