Intermediate Accounting 2 questions and verified correct answers

Equity securities - correct answer are described as securities representing ownership interest such as common, preferred, or other capital stock. Page(s): 17-2, Study Guide to accompany Intermediate Accounting, Volume 2, 15th Edition by Donald E. Kieso, Wiley, John & Sons, Incorporated NOOK Study ( , ). This material is protected by copyright. Investee - correct answer generally determines the accounting treatment for the investment subsequent to acquisition. fair value method - correct answer If market prices are available, the investment is valued and reported subsequent to acquisition using the fair value method. Equity Method - correct answer In instance of significant influence the investor is required to account for the investment. The carrying amount is periodically increased or decreased by the investor's proportionate share of earnings and decreased by all cash dividends. Controlling Interest - correct answer When one corporation acquires a controlling of 50% or more of another controlling interest. consolidated financial statements - correct answer Generally prepared in seperate financial statements for the parent and the subsidary. Reclassification Adjustment - correct answer The reporting of changes in unrealized gains or losses in comprehensive income is straight forward unless securities are sold during the year. Cash flow hedges - correct answer sed to hedge exposures to cash flow risk, which is exposure to the variability in cash flows. In accounting for cash flow hedges, the derivative should be presented at fair value on the balance sheet, but gains or losses are recorded in equity as a part of other comprehensive income. Hybrid securities - correct answer have characteristics of both debt and equity and often are a combination of traditional and derivative financial instruments. Page(s): 17-6, Study Guide to accompany Intermediate Accounting, Volume 2, 15th Edition by Donald E. Kieso, Wiley, John & Sons, Incorporated