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Unformatted text preview: ch12 Student: ___________________________________________________________________________ 1. Securities classified as held to maturity could be reported as either current or long-term in a classified balance sheet, depending upon their maturity dates. True False 2. All investments in debt securities whose fair values are not readily determinable are carried at historical cost. True False 3. Both debt and equity securities can be categorized as trading securities. True False 4. Net unrealized holding gains (losses) are reported in the income statement for trading securities. True False 5. Purchases and sales of securities are always reported as investing activities in a statement of cash flows. True False 6. Routine transfers of debt and equity investments among the trading, available for sale, and held to maturity portfolios need not be disclosed in the financial statements. True False 7. Both trading securities and securities available for sale are reported at their fair values. True False 8. All securities considered available for sale should be reported as current assets in a classified balance sheet. True False 9. Unrealized gains and losses are included in other comprehensive income for securities that are classified as available for sale. True False 10. When available-for-sale securities are sold, the full amount of any gain or loss realized on the sale is included in before-tax net income. True False 11. Companies must always use the equity method when they hold between 25% and 50% of the common stock of an investee. True False 12. The equity method is in many ways a partial consolidation. True False 13. Under the equity method of accounting for a stock investment, cash dividends received are considered a reduction of the investee's net assets. True False 14. When an equity method investment is sold, a gain or loss is recognized for the difference between its selling price and its cost. True False 15. If an investment is accounted for under the equity method, the investor reduces investment income and the investment account for amortization of goodwill acquired in the investment. True False 16. Selecting the fair value option for an available-for-sale investment is equivalent to reclassifying that investment as a trading security. True False 17. The fair value option can not be elected for significant-influence investments, because those must be accounted for under the equity method. True False 18. Under IAS No. 39, investments for which the investor lacks significant influence use basically the same reporting classifications as those used under U.S. GAAP. True False 19. Under IFRS No. 9, investments for which the investor lacks significant influence use basically the same reporting classifications as those used under U.S. GAAP....
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