Study guide ibus

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

2.

All investments in debt securities whose fair values are not readily determinable are carried at historical cost. True

3.

False

All securities considered available for sale should be reported as current assets in a classified balance sheet.
True

9.

False

Both trading securities and securities available for sale are reported at their fair values.
True

8.

False

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

7.

False

Purchases and sales of securities are always reported as investing activities in a statement of cash flows.
True

6.

False

Net unrealized holding gains (losses) are reported in the income statement for trading securities.
True

5.

False

Both debt and equity securities can be categorized as trading securities.
True

4.

False

False

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