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INVESTMENT 2 - INVESTMENT 2 3 Kale Co purchased bonds at a...

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INVESTMENT 2 3. Kale Co. purchased bonds at a discount on the open market as an investment and intends to hold these bonds to maturity. Kale should account for these bonds at a. Cost. b. Amortized cost. c. Fair value. d. Lower of cost or market. 4. For a marketable debt securities portfolio classified as held-to-maturity, which of the following amounts should be included in the period’s net income? I. Unrealized temporary losses during the period. II. Realized gains during the period. III. Changes in the valuation allowance during the period. 12. Nola has a portfolio of marketable equity securities that it does not intend to sell in the near term. How should Nola classify these securities, and how should it report unrealized gains and losses from these securities? Classify as Report as a 13. On December 29, 2003, BJ Co. sold a marketable equity security that had been purchased on January 4, 2002. BJ owned no other marketable equity security. An unrealized loss was reported in 2002 as other comprehensive income. A realized gain was reported in the 2003 income statement. Was the marketable equity security classified as available-for- sale and did its 2002 market price decline exceed its 2003 market price recovery? Available-for-sale 2002 market price decline exceeded 2003 market recovery 14. On January 10, 2003, Box, Inc. purchased marketable equity securities of Knox, Inc. and Scot, Inc., neither of which Box could significantly influence. Box classified both securities as available-for-sale. At December 31, 2003, the cost of each investment was greater than its fair market value. The loss on the Knox investment was considered other-than- temporary and that on Scot was considered temporary. How should Box report the effects of these investing activities in its 2003 income statement? I. Excess of cost of Knox stock over its market value. II. Excess of cost of Scot stock over its market value. a. An unrealized loss equal to I plus II. b. An unrealized loss equal to I only. c. A realized loss equal to I only. d. No income statement effect.
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