ACCT 3312 Test #1 (ch. 16,14,18) Questions and Answers Already Passed
What categories can managers use to classify debt investments? - Answers held-to-maturity, trading,
available-for-sale
Do entities report unrealized gains and losses on fair value adjustments to equity security investments in
earnings? - Answers -depends on classification of investment and if fair value option is elected
What does the face value/par value of a bond represent? - Answers the amount the issuer will pay the
bondholder at maturity
how is the price of a bond determined? (equation) - Answers DCF of interest payments + DCF of
principal
What is an HTM (held to maturity) debt investment? - Answers debt intended to be held for entire life
how are unrealized gains and losses treated for HTM's? - Answers not recognized
what is an HTM reported in the B/S as after purchase? - Answers amortized cost
what is a TS (trading security) debt investment? - Answers debt held in an active trading account with
the intent to be sold
how are unrealized gains and losses treated for TS's? - Answers recognized in net income
what is a TS reported in the B/S as? - Answers fair value
what is a AFS (available for sale) debt investment? - Answers debt that is neither HTM or TS, may be sold
if the conditions are right
how are unrealized gains and losses treated for AFS's? - Answers comprehensive other income
what is an AFS reported in the B/S as? - Answers fair value
What categories can managers use to classify debt investments? - Answers held-to-maturity, trading,
available-for-sale
Do entities report unrealized gains and losses on fair value adjustments to equity security investments in
earnings? - Answers -depends on classification of investment and if fair value option is elected
What does the face value/par value of a bond represent? - Answers the amount the issuer will pay the
bondholder at maturity
how is the price of a bond determined? (equation) - Answers DCF of interest payments + DCF of
principal
What is an HTM (held to maturity) debt investment? - Answers debt intended to be held for entire life
how are unrealized gains and losses treated for HTM's? - Answers not recognized
what is an HTM reported in the B/S as after purchase? - Answers amortized cost
what is a TS (trading security) debt investment? - Answers debt held in an active trading account with
the intent to be sold
how are unrealized gains and losses treated for TS's? - Answers recognized in net income
what is a TS reported in the B/S as? - Answers fair value
what is a AFS (available for sale) debt investment? - Answers debt that is neither HTM or TS, may be sold
if the conditions are right
how are unrealized gains and losses treated for AFS's? - Answers comprehensive other income
what is an AFS reported in the B/S as? - Answers fair value
