Q8. In one of your evening MBA courses, you are about to take an accounting exam and are concerned about your knowledge of

   accounting for marketable equity securities. You have the following data from a previous take-home assignment:

You are assumed to own 100 shares of each firm. Under SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities," the securities will be classified as either held-to-maturity, available-for-sale, or trading securities.

Which of the following statements regarding the income statement and balance sheet treatment of securities classified as held-to-maturity is most accurate? They are carried at:

A)   fair market value on the balance sheet with unrealized gains and losses excluded from income and reported as a separate component of shareholders' equity.

B)   cost on the balance sheet and coupon receipts are considered income.

C)   cost on the balance sheet with unrealized gains and losses reported in income.

Q9. Which of the following statements regarding the income statement and balance sheet treatment of securities classified as

    available-for-sale is most accurate? They are carried at:

A)   cost on the balance sheet and coupon receipts are considered income.

B)   fair market value on the balance sheet with unrealized gains and losses excluded from income and reported as a separate component of shareholders' equity.

C)   fair market value on the balance sheet with unrealized gains and losses reported in income.

Q10. Which of the following statements regarding the income statement and balance sheet treatment of securities classified as

    trading securities is most accurate? They are carried at:

A)   fair market value on the balance sheet with unrealized gains and losses reported in income.

B)   cost on the balance sheet with unrealized gains and losses reported in income.

C)   fair market value on the balance sheet with unrealized gains and losses excluded from income and reported as separate component of shareholders' equity.

答案和详解如下：

Q8. In one of your evening MBA courses, you are about to take an accounting exam and are concerned about your knowledge of

   accounting for marketable equity securities. You have the following data from a previous take-home assignment:

You are assumed to own 100 shares of each firm. Under SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities," the securities will be classified as either held-to-maturity, available-for-sale, or trading securities.

Which of the following statements regarding the income statement and balance sheet treatment of securities classified as held-to-maturity is most accurate? They are carried at:

A)   fair market value on the balance sheet with unrealized gains and losses excluded from income and reported as a separate component of shareholders' equity.

B)   cost on the balance sheet and coupon receipts are considered income.

C)   cost on the balance sheet with unrealized gains and losses reported in income.

Correct answer is B)

SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires a company to classify its securities into categories based upon the company's intent relative to the eventual disposition of the securities.

One of these categories, held-to-maturity securities, is composed of debt securities which a company has the positive intent and ability to hold to maturity. These securities are carried at the cost on the balance sheet and coupon receipts are considered income.

Q9. Which of the following statements regarding the income statement and balance sheet treatment of securities classified as

    available-for-sale is most accurate? They are carried at:

A)   cost on the balance sheet and coupon receipts are considered income.

B)   fair market value on the balance sheet with unrealized gains and losses excluded from income and reported as a separate component of shareholders' equity.

C)   fair market value on the balance sheet with unrealized gains and losses reported in income.

Correct answer is B)

SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires a company to classify its securities into categories based upon the company's intent relative to the eventual disposition of the securities.

One of these categories, available-for-sale securities, may be sold to address the liquidity and other needs of a company. Debt and equity securities classified as available-for-sale are carried at fair market value on the balance sheet with unrealized gains and losses excluded from income and reported as a separate component of shareholders' equity.

Q10. Which of the following statements regarding the income statement and balance sheet treatment of securities classified as

    trading securities is most accurate? They are carried at:

A)   fair market value on the balance sheet with unrealized gains and losses reported in income.

B)   cost on the balance sheet with unrealized gains and losses reported in income.

C)   fair market value on the balance sheet with unrealized gains and losses excluded from income and reported as separate component of shareholders' equity.

Correct answer is A)

SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires a company to classify its securities into categories based upon the company's intent relative to the eventual disposition of the securities.

One of these categories, trading securities, is for debt and equity securities acquired for the purpose of selling them in the near term. These securities are measured at fair market value and are listed as current assets on the balance sheet. Unrealized and realized gains and losses are reported in income

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