Question

In: Accounting

The accounting for investments in another entity's equity instruments depends mainly on the quality of earnings...

The accounting for investments in another entity's equity instruments depends mainly on

the quality of earnings of the investee.

whether the investee pays dividends.

the level of influence the investor is able to exert.

the level of influence the investor actually exerts.

The fair value loss impairment model

calculates the impairment loss as the difference between the asset’s original cost and its current carrying amount.

requires a separate impairment test.

calculates the impairment loss as the difference between the asset’s fair value and its current carrying amount.

is used for all investments that are not accounted for as FV–NI.

Accumulated other comprehensive income includes

current year's net income.

all previous debits and credits to other comprehensive income.

all previous debits to other comprehensive income.

all previous credits to other comprehensive income.

Regarding the reporting of investment income under the FV–NI method, for companies reporting in accordance with ASPE, which of the following statements is true?

Holding gains and losses are always tracked separately from interest and dividend income.

None of these are true.

Interest income must be separated from net gains or losses recognized on financial instruments.

Interest income must be separated from dividends recognized on financial instruments.

Solutions

Expert Solution

Option D
the level of influence the investor is able to exert.
In the equity method of accounting the investor must have significant influence that it is able to exert
ans 2
calculates the impairment loss as the difference between the asset’s fair value and its current carrying amount.
Impairement loss is calculated by writing down the asset to its fair market value.
ans 3
all previous debits and credits to other comprehensive income.
The AOCI includes the other comprehensive income of current and prior periods
ans 4
Interest income must be separated from net gains or losses recognized on financial instruments.
As per investment income under FV-NI method the
interest income is always different and sepreated from
losses or gains recognized on the financial instruments
If any doubt please comment

ekkarill92 answered 5 months ago
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