Investment is actively managed internally on a fair

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Unformatted text preview: 's purpose is collecting cash flows. C. Investor cannot renegotiate, sell, or settle the debt to minimize losses due to deteriorating credit quality. D. Investment is actively managed internally on a fair value basis but doesn't qualify for FV-OCI. 128.Which of the following is not a characteristic of "simple" debt? A. Investor's purpose is collecting cash flows. B An amount of principal (adjusted for premium or discount) is transferred to the borrower at issuance . that will be returned to the debt holder when the debt matures. C. The debt instrument is not a derivative. D The debt cannot be prepaid or settled in a way that the investor does not recover substantially all of its . original investment unless that is what the investor chooses. 129.If a debt instrument is viewed as complex, which of the following is most likely not true? A. The debt is always classified as FV-NI. B. The investor will recognize large unrealized losses in the period in which fair value of the debt changes. C. The debt may be accounted for at FV-OCI, depending on the investor's business purpose for holding the debt. D. The debt may be a derivative. 130.Brown, Inc., purchased an equity investment for the purposes of maximizing its return on investment. How should Brown account for the investment? A. Amortized cost. B. FV-NI. C. FV-OCI. D. Cost method. 131.Cortez Associates purchased a debt investment that meets the characteristics of a simple debt instrument. Cortez intends to hold the debt for purposes of maximizing its return on investment. How should Cortez account for the investment? A. Amortized cost. B. FV-NI. C. FV-OCI. D. Cost method. 132.Jackson & Sons purchased a debt investment that meets the characteristics of a simple debt instrument. Jackson is holding the debt for resale in the near future. How should Jackson account for the investment? A. B. C. D. Amortized cost. FV-NI. FV-OCI. Cost method. 133.Cain Corporation owns $10,000 of IBM bonds. Some bonds are held for immediate sale, but others are held in te...
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