The accounting for fair value hedges records the derivative at its amortized cost. carrying value. fair...

The accounting for fair value hedges records the derivative at its

amortized cost.

carrying value.

fair value.

historical cost.

None of the above.

How does electing the Fair Value Option under US GAAP change the reporting for investments classified as Trading Securities? Balance Sheet effect / Income Statement effect

No change/ No change

Change to fair value / Change to recognized unrealized gain & loss in OCI

Change to fair value / Change to recognized unrealized gain & loss in the Income Statement

No change / Change to recognized realized gain & loss in the Income Statement

None of the above describes the change due to electing the Fair Value Option

A company records an unrealized loss on short-term debt securities classified as “trading.” Unrealized losses are not tax deductible but realized losses are. This would result in what type of difference and in what type of deferred income tax?

Type of Difference Deferred Tax

Temporary Liability

Temporary Asset

Permanent Liability

Permanent Asset

Solutions

Expert Solution

1) The accounting for fair value hedges records the derivative at its

Solution: Fair value

Explanation: The accounting for fair value hedges records the derivative at the fair value i.e. whatever price a seller and buyer agree on if they know the market and both want to make the agreement

2) How does electing the Fair Value Option under US GAAP change the reporting for investments classified as Trading Securities?

Solution: No change/ No change

Explanation: Fair Value Option under US GAAP does not change the reporting for investments classified as Trading Securities

3) A company records an unrealized loss on short-term debt securities classified as “trading.” Unrealized losses are not tax deductible but realized losses are. This would result in what type of difference and in what type of deferred income tax?

Solution: Temporary Asset

Explanation: Since the current assets fluctuates in response to seasonal or anticipated short-term, thus will be categorised as temporary Asset

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Explain why either amortized cost or fair value accounting could be preferable for each of the...

Explain why either amortized cost or fair value accounting could be preferable for each of the following items. 1) Productive assets held for use 2) Assets held for sale 3) Equity investments 4) Long‐term debt 5) Pension assets and liabilities

ASC 815 recommends that a derivative be valued at its fair market value. Furthermore, in a...

ASC 815 recommends that a derivative be valued at its fair market value. Furthermore, in a cash flow hedge, the changes in the value are separated into the effective and non-effective portions. How does the separation of the changes in value impact other comprehensive income (OCI) and current income in the income statement? Why?

The 2017 annual report of Albany Corporation reports the following (in millions): Amortized Cost Fair Value...

The 2017 annual report of Albany Corporation reports the following (in millions): Amortized Cost Fair Value December 31, 2016 Short-term investments — available-for-sale debt securities $840.7 $835.0 Short-term investments — trading debt securities 108.4 94.2 Total short-term investments $949.1 $929.2 December 31, 2017 Short-term investments — available-for-sale debt securities $ 462.9 $ 463.4 Short-term investments — trading debt securities 79.5 75.6 Total short-term investments $542.4 $539.0 a. What amount does Albany report as trading debt securities on its balance sheets...

Describe fair value accounting and fair value measurement. Give examples of fair value accounting and measurement

explain the cost/fair value, equity and consolidation methods of accounting?

How does the financial statement impact differ between the cash flow hedges and the fair value...

How does the financial statement impact differ between the cash flow hedges and the fair value hedges of the AFS security portfolio?

INITIAL POST: Briefly define and discuss financial instruments, derivatives, and hedges (fair value and cash flow)....

INITIAL POST: Briefly define and discuss financial instruments, derivatives, and hedges (fair value and cash flow). You can find some initial information in the textbook, Chapter 13, appendix 13.1 but you should use resources other than the textbook for your post.

1. What is fair value accounting? 2. Fair value accounting classifies FV assets into three categories....

1. What is fair value accounting? 2. Fair value accounting classifies FV assets into three categories. What are those categories? 3. What are some issues with the reliability of FV assets classified as Level 3? 4. Would you audit a portfolio of Level 3 assets differently than a portfolio of Level 1 assets?

FAIR VALUE AND HISTORICAL COST ACCOUNTING - Discuss three challenges of historical cost measurement CONTROLLERSHIP -Discuss...

FAIR VALUE AND HISTORICAL COST ACCOUNTING - Discuss three challenges of historical cost measurement CONTROLLERSHIP -Discuss three major challenges facing controllers today -Discuss three ways in which controllership have changed in the past 100 years SOCIAL ROLE OF ACCOUNTANCY -Discuss three major social roles of accountancy ROLE OF GOVERNMENT IN STANDARD SETTING -Why do governments intervene in setting accounting standards instead of leaving it to the private sector?

Accounting standard AASB 13 Fair Value Measurement defines fair value as the price that would be...

Accounting standard AASB 13 Fair Value Measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between “market participants” at the measurement date. What are the strengths and weaknesses of fair value as compared with other measurement methods such as historical cost? Refer to the qualitative characteristics of financial information outlined in the conceptual framework in your response.

Subjects