ACC 430 Exam 2 Test Questions with Solved Solutions 2025.

Trading Securities - Answer -A security that is acquired with the intent of selling it within hours or days. -Items held longer than short-term could also be trading securities (Ex: Debt, Equity, Stock/Bond) Available-for-Sale Securities - Answer -Investments in debt/equity securities that have readily determinable FV's not classified as trading securities or as held-to-maturity securities -Can be Debt or Equity Investments Held-to-Maturity Securities - Answer -Securities in which the reporting entity has the positive intent and ability to hold the securities to maturity -Can only be Debt Investments How are Trading Securities measured? - Answer -Measured at fair value in the statement of financial position. -Unrealized holding gains/losses for trading securities go in the Income Statement How are Available-for-Sale Securities measured? - Answer -Measured at fair value in the statement of financial position -Unrealized holding gains/losses are reported in Other Comprehensive Income (OCI) until realized When are unrealized gains/losses for Available-for-Sale Securities recognized in earnings? - Answer -When some or all of the unrealized gain/loss is designated as being hedged in a fair value hedge during the period of the hedge. How are Held-to-Maturity Securities measured? - Answer -Measured at amortized cost in the Statement of Financial Position -Gains/losses from transactions are recorded in earnings How are dividend and interest income recorded in the three types of securities? - Answer -Those and amortization of the premium and discount arising at acquisition are recorded in earnings. (Income Statement)