ACG 3113 Investments Ch 12
Exam Study Set
Two types of investments - Answer 1. Debt securities - Bonds.
2. Equity securities -Stocks
Types of debts securities - Answer US Gov. securities, municipal & corporate bonds,
convertible debt, commercial paper
Debt Valuation: Plans to sell - Answer Fair value is used
Debt Valuation: No Plans to Sell - Answer Amortization
3 Accounting Categories of Debt Securities are: - Answer 1. Held to Maturity.
2. Trading.
3. Available For Sale.
Held to Maturity reporting approach: - Answer Investor has positive Intent to hold for life
of investment. HTM's are valued by amortized cost. Unrealized gain or loss is ignored,
but fair value is noted in disclosure notes.
Held to Maturity uses what kind of method to amoritize? - Answer Effective Interest,
unless straight line yields similar amounts.
To record receipt of first semiannual interest payment on a held to maturity: - Answer
Debit Cash
Debit if Premium, Credit if discount,
Credit Interest Revenue.
To accrue interest and amortize the discount on a held to maturity: - Answer Debit
Interest Recievable,
Debit if Premium, Credit if discount, Credit Interest Revenue.
How do available-for-sale securities flow to the financial reports. - Answer Reported in
the balance sheet at Fair Value. Unrealized holding gains and losses reported as part of
comprehensive income.
Available for Sale Securities - Answer Used for debt or equity that does not quality as
held to maturity or trading. Unrealized holding gains and losses are recognized in O C I,
accumulated in other comprehensive income in shareholders equity.
A F S Security: To record year end fair value is less that and carrying amount - Answer
Exam Study Set
Two types of investments - Answer 1. Debt securities - Bonds.
2. Equity securities -Stocks
Types of debts securities - Answer US Gov. securities, municipal & corporate bonds,
convertible debt, commercial paper
Debt Valuation: Plans to sell - Answer Fair value is used
Debt Valuation: No Plans to Sell - Answer Amortization
3 Accounting Categories of Debt Securities are: - Answer 1. Held to Maturity.
2. Trading.
3. Available For Sale.
Held to Maturity reporting approach: - Answer Investor has positive Intent to hold for life
of investment. HTM's are valued by amortized cost. Unrealized gain or loss is ignored,
but fair value is noted in disclosure notes.
Held to Maturity uses what kind of method to amoritize? - Answer Effective Interest,
unless straight line yields similar amounts.
To record receipt of first semiannual interest payment on a held to maturity: - Answer
Debit Cash
Debit if Premium, Credit if discount,
Credit Interest Revenue.
To accrue interest and amortize the discount on a held to maturity: - Answer Debit
Interest Recievable,
Debit if Premium, Credit if discount, Credit Interest Revenue.
How do available-for-sale securities flow to the financial reports. - Answer Reported in
the balance sheet at Fair Value. Unrealized holding gains and losses reported as part of
comprehensive income.
Available for Sale Securities - Answer Used for debt or equity that does not quality as
held to maturity or trading. Unrealized holding gains and losses are recognized in O C I,
accumulated in other comprehensive income in shareholders equity.
A F S Security: To record year end fair value is less that and carrying amount - Answer
