ACCT 401 - Pre-Lecture, Question 1 Correct! A correct...

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Pre-Lecture, Question 1 Correct! A correct valuation is held-to-maturity securities at amortized cost. Pre-Lecture, Question 2 A requirement for a security to be classified as held-to-maturity is ability to hold the security to maturity. positive intent. the security must be a debt security. All of these are required. Pre-Lecture, Question 3 Redman Company's trading securities portfolio which is appropriately included in current assets is as follows: December 31, 2010 Cost Fair Value Unrealized Gain (Loss) Arlington Corp. 250,000 200,000 $ (50,000 ) Downs, Inc. 245,000 265,000 20,000 $ 495,000 $ 465,000 $ (30,000 ) Ignoring income taxes, what amount should be reported as a charge against income in Redman's 2010 income statement if 2010 is Redman's first year of operation? Pre-Lecture, Question 4 Correct! Holdings of more than 50% are accounted for under the equity method. If the parent company owns 90% of the subsidiary company's outstanding common stock, the company should generally account for the income of the subsidiary under the divesture method. cost method. equity method. fair value method. Pre-Lecture, Question 5
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Correct! $15,000 plus $35,000 less $10,000 reclassification results in $40,000. The following information relates to Vernon Company for 2010: Realized gain on sale of available-for-sale securities $15,000 Unrealized holding gains arising during the period on available-for-sale securities 35,000 Reclassification adjustment for gains included in net income 10,000 Vernon's 2010 other comprehensive income is $40,0 00. $25,0 00. $50,0 00. $60,0 00. Pre-Lecture, Question 6 Correct! Impairment for debt and equity securities is based on a fair value test. Companies base impairment for debt and equity securities on a(n) intrinsic value test. fair value test. discounted cash flow test. equity test. Pre-Lecture, Question 7 Correct! The carrying value assigned to the available-for-sale security should be its fair value at the date of the transfer.
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When an investment in a held-to-maturity security is transferred to an available-for-sale security, the carrying value assigned to the available-for-sale security should be the lower of its original cost or its fair value at the date of the transfer. the higher of its original cost or its fair value at the date of the transfer. its original cost. its fair value at the date of the transfer. Pre-Lecture, Question 8 Correct! The unrealized gain or loss at the date of transfer increases or decreases stockholders' equity.
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ACCT 401 - Pre-Lecture, Question 1 Correct! A correct...

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