Question

70 – When the equity method of accounting for investment is used by the investor, the investment account

1. A cash dividend is received from the investee
2. The investee reports net income for the year
3. The investor records additional depreciation related to the investment
4. The investee reports a net loss for the year.

71- Which of the following investment securities held by Bogey Inc, are not reported at fair value in its balance sheet?

1. Debt securities held as available for sale securities.
2. Debt securities held to maturity.
3. Bonds held as trading securities
4. All of these answer choices are reported at fair value.

73- When a debt security is appropriately carried and reported as securities available for sale, a gain should be reported in the income statement:

1. When fair value of the security increases.
2. When the present value of the security increases.
3. Only when the Dow Jones industrial Average increases at least 100 points.
4. Only when the security is sold.

74- when the fair value option is elected for available for sale securities:

1. Amortized cost is used on the balance sheet.
2. Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) account
3. Unrealized holding gains and losses are included in net income
4. None of the above

Answer 1

70 - When the equity method of accounting for investment is used by the investor, the investment account, "The investee reports a net loss for the year."

Answer is D. The investee reports a net loss for the year.

71 - Debt securities held to maturity are not reported at fair value in its balance sheet. They are reported at amortised cost.

Answer is B. Debt securities held to maturity.

73 - When a debt security is appropriately carried and reported as securities available for sale, a gain should be reported in the income statement: Only when the security is sold.

Answer is D. Only when the security is sold.

74 - when the fair value option is elected for available for sale securities: Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) account

Answer is B. Unrealized holding gains and losses are included in accumulated other comprehensive income (loss) account