In its year end financial statements, Big Bank Corporation reports marketable debt securities of $416,099 million. The footnotes disclose that these securities have an amortized cost of $418,961 million. Which of the following is true? Select one: a. There are net unrealized losses of $2,862 million on these securities. b. These are trading securities. c. These are available-for-sale securities. d. Both A and C e. Both B and C

In its year end financial statements, Big Bank Corporation reports marketable debt securities of $416,099 million. The footnotes disclose that these securities have an amortized cost of $418,961 million. Which of the following is true? Select one: a. There are net unrealized losses of $2,862 million on these securities. b. These are trading securities. c. These are available-for-sale securities. d. Both A and C e. Both B and C

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7MCQ

See similar textbooks

Similar questions

Victoria Company has investments in marketable securities classified as trading and available-for-sale. At the beginning of the year, the aggregate market value of each portfolio exceeded its amortized cost. During the year, Victoria sold some securities from each portfolio. At the end of the year, the aggregate amortized cost of each portfolio exceeded its market value. Victoria also has investments in bonds classified as held-to-maturity, all of which were purchased for face value. During the year, some of these bonds held by Victoria were called prior to their maturity by the bond issuer. Three months before the end of the year, additional similar bonds were purchased for face value plus 2 months accrued interest. Required: 1. Explain how Victoria accounts for: a. sale of securities from each portfolio b. each equity securities portfolio at year-end 2. Explain how Victoria accounts for the disposition prior to their maturity of the long-term bonds called by their issuer. 3. Explain how Victoria reports the purchase of the additional similar bonds at the date of the acquisition.
During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
Waterton Corporation reported that short-term investments in debt securities consisted of the following (in millions): Amortized Cost Fair Value December 31 Short-term investments available - for - sale debt securities $1,373.6 $1,373.8 Short-term investments-trading debt securities 161.8 132.0 Total short-term investments $1,535.4 $1,505.8 Which of the following is true? Select one: a. Unrealized losses of $29.8 million on trading securities are included in annual income. b. Waterton's year-end balance sheet includes short-term investments of $1,535.4 million. c. There are no net unrealized gains on available-for-sale securities. d. Accumulated other comprehensive income included no unrealized gains or losses. e. None of these are correct
In footnotes to its year-end annual report, Bancfirst Corp. reported that held-to-maturity debt securities with an amortized cost of $8,730 thousand had an estimated fair value of $8,806 thousand. The balance sheet reported: Select one: a. Held-to-maturity assets of $8,730 thousand b. Held-to-maturity assets of $8,806 thousand c. Accumulated other comprehensive income of $76 thousand related to held-to-maturity assets d. Both A and C e. Both B and C
[The following information applies to the questions displayed below.] Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following. Fair Value $ 492,000 150,000 641,950 Cost $ 533,600 159, 310 661,900 Stoll enters into the following transactions involving its available-for-sale debt securities this year. January 29 Sold one-half of the Company B notes for $78,430. July 6 Purchased Company X bonds for $120,800. Required: 1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities. 2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities. Available-for-Sale Securities Company A bonds Company B notes Company C bonds. November 13 Purchased Company Z notes for $267,100. December 9 Sold all of the Company A bonds for $524,100. Fair…
Use the following information on a company's investments in debt securities to answer the following question. The company's accounting year ends December 31. Investment Date of Acquisition 9/20/23 $38,000 Colt Compan y bonds Cost Fair Value Date Sold Selling 12/31/23 Price $37,000 2/10/24 $42,000 Dana Compan y bonds 10/2/23 14,000 14,200 1/17/24 13,000 If the above investments are categorized as available-for-sale securities, what is the net effect on 2024 other comprehensive income? Select one: a. $ 800 increase b. $0 c. $3,800 increase d. $ 800 decrease
[The following information applies to the questions displayed below.] Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $28,200. February 9 Purchased Sony notes for $64,890. Purchased Mattel bonds for $50,500. June 12 December 31 Fair values for debt in the portfolio are Johnson & Johnson, $33,500; Sony, $53,350; and Mattel, $58,750. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $33,500. July 5 Sold all of the Mattel bonds for $42,850. July 22 Purchased Sara Lee notes for $20,500. August 19 Purchased Kodak bonds for $22,300. December 31 Fair values for debt in the portfolio are Kodak, $22,825; Sara Lee, $22,000; and Sony, $66,000. Year 3 February 27 Purchased Microsoft bonds for $159,800. June 21 Sold all of the Sony notes for $65,600. June 30 Purchased Black & Decker bonds for $60,400. August 3…
On January 1, 2016, a company's balance sheet reports its investments in debt securities as follows: Assets Investment in trading securities Investment in AFS securities Investment in HTM securities Equity Accumulated other comprehensive income: Unrealized gains (losses) on AFS securities Additional information: a. The HTM securities are $210,000 face value securities purchased on January 1, 2014, at a yield of 4%. The securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 6%. $165,000 95,000 217,922 $4,500 b. The trading securities on hand on January 1 were sold in 2016 for $185,000. c. More trading securities were purchased for $105,000. They are still on hand at December 31, 2016, and have a fair value of $120,000. d. AFS securities, originally purchased for $27,000 with a carrying value of $24,000 as of January 1, 2016, were sold for $32,000. e. AFS securities on hand at December 31, 2016, have a fair value of $85,000 $20,000 $15,000…
1. Record the unrealized gains or losses occurring at year end. 2. Record the unrealized gains or losses occurring on the date of sale. 3. Record the sale of the Coca-Cola bonds in 2025.
1. Record the unrealized gains or losses occurring at year end. 2. Record the unrealized gains or losses occurring on the date of sale. 3. Record the sale of the Coca-Cola bonds in 2025.
Pharoah Company has these data at December 31, 2022, the end of its first year of operations. Debt Securities Trading Available-for-sale (a) Cost $119,700 100,300 The available-for-sale securities are held as a long-term investment. Fair Value $125,700 98,300 Prepare the adjusting entries to report: (1) Trading securities at fair value and (2) Available-for-sale securities at fair value. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation (1) Debit Credit
Required information [The following information applies to the questions displayed below.] Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $25,500. February 9 Purchased Sony notes for $59,940. June 12 Purchased Mattel bonds for $45,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $29,500; Sony, $49, 350; and Mattel, $54,750. Year 2 April 15 July 5 Sold all of the Mattel bonds for $39,350. Sold all of the Johnson & Johnson bonds for $28,500. July 22 Purchased Sara Lee notes for $15,500. August 19 Purchased Kodak bonds for $18,800. December 31 Fair values for debt in the portfolio are Kodak, $19,075; Sara Lee, $17,000; and Sony, $62,000. Year 3 February 27 Purchased Microsoft bonds for $159,800. June 21 Sold all of the Sony notes for $61,600. June 30 Purchased Black & Decker bonds for…