51 which of the followingis correct regarding available for sale securities a availa 4313735

51 which of the followingis correct regarding available for sale securities a availa 4313735

51.Which of the followingis correct regarding available-for-sale securities?

a.Available-for-sale securities are reported at cost on the balance sheet date, and unrealized holding gains and losses are included in income of the current period.

b.Available-for-sale securities are reported at fair value on the balance sheet date, and unrealized holding gains and losses are included in income of the current period.

c.Available-for-sale securities are reported at fair value on the balance sheet date, but unrealized holding gains and losses are not included in income of the current period.

d.Available-for-sale securities are reported at cost on the balance sheet date, but unrealized holding gains and losses are not included in income of the current period.

52.Realized gains and losses on investments available-for-sale are reported

a.as a current asset.

b.on the income statement.

c.on the balance sheet as part of shareholders' equity.

d.as a contra asset.

53.A realized gain or loss on the sale of an available-for-sale equitysecurity is determined by comparing

a.the carrying value of the security with the proceeds from the sale.

b.the original cost of the security with the proceeds from the sale.

c.the market value at the latest balance sheet date with the proceeds from the sale.

d.the original cost with the security's carrying value.

54.The carrying value of available-for-sale debt and equity securities is

a.historical cost.

b.the current fair value.

c.the lower of cost or current market value.

d.the higher of cost or current market value.

55.Wright Company has available-for-sale debt and equity securities that on December 31, 2017, had a cost of $110,000 and a market value of $108,000. The market value rose to $123,000 by December 31, 2018. What accounting action is required on December 31, 2018?

a.Allowance for Change in Fair Value of Investments should be credited for $15,000.

b.Unrealized Holding Gain/Loss-Available-for-Sale Securities should be debited for $13,000.

c.Allowance for Change in Fair Value of Investments should be debited for $15,000.

d.Unrealized Holding Gain/Loss-Available-for-Sale Securities should be credited for $13,000.

56.Reagan Company purchased 10,000 shares of Clinton’s Company at $45 per share plus $15,000 of Delta Company’s 12% bonds, acquired at par, as available-for-sale securities. The bonds pay interest on June 30 and December 31 each year. What amount should be recorded to the Investment in Available-for-Sale Securities account?

a.$450,000

b.$466,800

c.$15,000

d.$465,000

57.Chang Company purchased several investments in December 2017. Costs and market values of those investments on December 31, 2017, are presented below:

?

Cost

Market Value

XYZ stock

$200,000

$180,000

ABC stock

400,000

420,000

DEF stock

600,000

540,000

?

Assuming all of the securities are classified as available-for-sale, the journal entry required on December 31, 2017, the end of Chang’s fiscal year, would include a

a.

debit to Unrealized Holding Gain/Loss-Available-for-Sale of $60,000.

b.

credit to Unrealized Holding Gain/Loss-Available-for-Sale of $60,000.

c.

credit to Unrealized Holding Gain/Loss-Available-for-Sale of $80,000.

d.

debit to Investment in Available-for-Sale Securities of $60,000.

58.Bark Corporation began operations on January 1, 2017. At December 31, 2017, Bark appropriately had a credit balance in Allowance for Change in Fair Value of Investments of $330. No transactions related to these investments occurred during 2018, and the cost and market values on December 31, 2018, are as follows:

Investment

Cost

Fair Value

Z Company

$700

$980

Y Company

1,115

1,110

X Company

1,445

1,420

W Company

880

1,100

?

In the December 31, 2018 adjusting entry, there will be a

a.

credit of $140 to Unrealized Holding Gain/Loss-Available for Sale Securities.

b.

debit of $800 to Unrealized Holding Gain/Loss-Available for Sale Securities.

c.

debit of $140 to Allowance for Change in Fair Value of Investments.

d.

debit of $800 to Allowance for Change in Fair Value of Investments.

59.All of the following statements regarding available-for-sale debt securities are true except

a.

premiums and discounts are not amortized.

b.

Interest Income may be debited at the time of acquisition.

c.

the securities will be valued using the lower of cost or market method.

d.

realized gain or loss is the difference between the amortized cost of the bonds and the proceeds from their sale.

60.For available-for-sale equity securities, the receipt of a cash dividend would be reported as

a.

a reduction from retained earnings.

b.

an increase in investment in available-for-sale securities.

c.

a reduction in investments in available-for-sale securities.

d.

dividend income.

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