Exam 7: Financial Assets

What should an investment in a debt investment be classified as when management has not specifically identified the classification? That is to say,in the absence of an election,what is the default category?

Explain the characteristics of a financial asset.Discuss if cash has the characteristics of a financial asset.Why is (or is not)cash a financial asset?

Star Corp.purchases a $100,000 face value bond which matures in two years.The coupon rate is 6% and the market rate is 5%.How much is the premium or discount (rounded)?

Which statement is correct about an at fair value through OCI investment?

Identify whether each of the following items is a financial asset:

Based on the following information,what amount will be presented for "investment in investee" on the consolidated balance sheet of Spenser for its wholly owned subsidiary?

On January 25,2016,Mulroney Ltd.purchased 100 common shares of RBC (Royal Bank of Canada)for $40 each.During the remainder of 2016,Mulroney received $2.10 per share in dividends and RBC's earnings per share were $5.50.The closing price of the shares on the fiscal year-end date of December 31,2016 was $41. Required: Assume that Mulroney irrevocably elected to classify its investment at fair value through OCI. a.At what value should Mulroney report the RBC shares on its December 31,2016 balance sheet? b.How much income should Mulroney report in 2015 in relation to these shares? c.How much other comprehensive income (OCI)should Mulroney report in 2016 in relation to these shares?

For financial reporting purposes,financial assets can be put into one of seven categories: subsidiaries,joint ventures,associates,at fair value through profit or loss,at fair value through OCI,amortized cost,and joint operations.For each of the following items,identify the possible categories into which it can be placed.More than one category is possible for an item.

Fisher Corporation has the following investments at December 31,2016: If Fisher classifies its investment in Brooke at amortized cost,what amount will be reported in Fisher's 2016 year-end balance sheet?

Fisher Corporation has the following investments at September 30,2016: What method of accounting will Fisher use to account for its investment in Cookstown if this investment is classified as an associate?

Explain the meaning of the "effective interest method."

A bond has a maturity value of $500,000 payable in 3 years.These bonds have a 5% coupon rate payable annually,and the market yield was 2% when the bonds were purchased.How much will be recorded for the bond purchase (rounded)?

Willow Corp.is a real estate developer with its headquarters in Burlington,Ontario. As a result of recent increases in land prices,Willow has accumulated a substantial amount of excess cash.It is looking to invest in a building supply company,but has not yet found a suitable company.To earn a reasonable return and to minimize risk,Willow invests its excess cash in common shares of large,stable corporations. 1.On Jan 1,2015,Willow paid $1,080,000 to purchase 120,000 common shares of North Line. 2.On December 27,2015,North Line declared and paid a dividend of $0.25 per common share. 3.On December 31,2015,the market value of the common shares was $1,200,000. 4.On June 30,2016,Willow sold the common shares for $1,620,000. Required: Using the following table,indicate the amounts to be reported in the balance sheet,through profit or loss,and through other comprehensive income for 2015 and 2016 under two scenarios: a.Willow irrevocably elected to designates the investment in common shares as an at fair value through OCI (FVOCI)investment. b.Willow designates the investment in common shares as an at fair value through profit or loss (FVPL)investment.

Explain the nature of and the appropriate accounting treatment for investments in subsidiaries,joint ventures,and associates.

Which statement is correct about joint arrangements?

On January 1,2017,a company paid $100,000 to purchase 100 Government of Canada bonds that mature on December 31,2021,and pay interest at 5%.At December 31,2017,the bonds had a quoted price of $998 per bond. Fill in the attached table assuming a.Classified at fair value through profit or loss b.Classified at amortized cost

ACE Inc has the following investments at December 31,2016: If ACE classifies its investment in DEF at fair value through profit or loss,what amount will be reported in income for the three months ended December 31,2016 pertaining to this investment?

Fish Corp.purchases a $100,000 face value bond which matures in one year.The coupon rate is 6% and the market rate is 6%.What is the premium or discount?

What is the meaning of "control"?

Amacon Corporation has the following investments at December 31,2016: If Amacon irrevocably elected to classify its investment in DEF at fair value through OCI,what amount will be reported in income for the three months ended December 31,2016 pertaining to this investment?