ACC 302 Ch.12 Questions and Correct
Answers
Which category of securities is presented on the balance sheet at amortized cost?
Held-to-maturity securities
Accumulated Other Comprehensive Income in the shareholders' equity section of the
balance sheet reflects changes in the fair value of securities for which type of securities?
Available-for-sale securities
For trading securities, unrealized holding gains and losses are included in net income:
On each reporting date.
Hawk Corporation purchased 10,000 Diamond Corporation bonds in 2021 for $58 per
bond and classified the investment as securities available-for-sale. The value of the
Diamond investment was $80 per bond on December 31, 2022, and $103 per bond on
December 31, 2023. During 2024, Hawk sold all of its Diamond investment at $140 per
bond.
In its 2024 income statement, Hawk would report a gain of:
($103-$58)*10,000 = $450,000
$450,000+$820,000
$820,000
Jeremiah Corporation purchased debt securities during 2024 and classified them as
securities available-for-sale. All declines are considered to be temporary. How much
gain will be reported by Jeremiah Corporation in the December 31, 2024, income
statement relative to the portfolio?
Answers
Which category of securities is presented on the balance sheet at amortized cost?
Held-to-maturity securities
Accumulated Other Comprehensive Income in the shareholders' equity section of the
balance sheet reflects changes in the fair value of securities for which type of securities?
Available-for-sale securities
For trading securities, unrealized holding gains and losses are included in net income:
On each reporting date.
Hawk Corporation purchased 10,000 Diamond Corporation bonds in 2021 for $58 per
bond and classified the investment as securities available-for-sale. The value of the
Diamond investment was $80 per bond on December 31, 2022, and $103 per bond on
December 31, 2023. During 2024, Hawk sold all of its Diamond investment at $140 per
bond.
In its 2024 income statement, Hawk would report a gain of:
($103-$58)*10,000 = $450,000
$450,000+$820,000
$820,000
Jeremiah Corporation purchased debt securities during 2024 and classified them as
securities available-for-sale. All declines are considered to be temporary. How much
gain will be reported by Jeremiah Corporation in the December 31, 2024, income
statement relative to the portfolio?
