Amacon Corporation has the following investments at December 31, 2020: $\begin{array}{|l|r|r|r|r|} \hline & \text { Historical cost } & \begin{array}{r} \text { Fair value } \\ \text { Sept } 30,2019 \end{array} & \begin{array}{r} \text { Fair value } \\ \text { Sept 30, 2020 } \end{array} & \begin{array}{r} \text { Fair value } \\ \text { Dec 31, 2020 } \end{array} \\ \hline \text { Shares of DEF } & \$ 25,000 & \$ 15,000 & \$ 25,000 & \$ 30,000 \\ \hline \begin{array}{l} \text { Bonds of Brooke } \\ \text { (purchased at par value) } \end{array} &10,000 &12,000 & 11,000 & 12,500 \\ \hline \text { Shares of CooksTown } & 12,000 & 18,000 & 16,000 & 16,000 \\ \hline \text { Shares of Daisy } & 18,000 & 16,500 & 19,500 & 20,500 \\ \hline \end{array}$ -According to the above table.If Amacon classifies its investment in DEF at fair value through profit or loss, what amount will be reported in other comprehensive income at December 31, 2020?

A) $0 B) $3,000 loss. C) $3,000 gain. D) $5,000 gain. A) $0 B) $3,000 loss. C) $3,000 gain. D) $5,000 gain.

Philips has a 50% joint operation interest in Josef. Based on the following information, what amount will be presented for current assets on Philips' proportionately consolidated balance sheet? \[\begin{array} { | l | r | r | } \hline & \text { Philips } & \text { Josef } \\ \hline \text { Current assets } & \$ 500 & \$ 550 \\ \hline \text { Long-term assets } & 300 & 50 \\ \hline \text { Investment in investee } & 200 & 0 \\ \hline \text { Current liabilities } & 350 & 200 \\ \hline \text { Long-term liabilities } & 450 & 300 \\ \hline \text { Equity } & 200 & 100 \\ \hline \end{array}\]

A) $500 B) $550 C) $775 D) $1,050 A) $500 B) $550 C) $775 D) $1,050

On January 1, 2020, a company paid $100,000 to purchase 100 Government of Canada bonds that mature on December 31, 2024 and pay interest at 5%. At December 31, 2020, the bonds had a quoted price of $1,022 per bond. Fill in the attached table assuming a. Classified at fair value through profit or loss b. Classified at fair value through other comprehensive income c. Classified at amortized cost \(\begin{array}{c} \begin{array}{|l|} \hline\\ \hline \text {Financial asset category for the }\\ \text {balance sheet}\\ \hline \text {Accounting method that should}\\ \text { be Used}\\ \hline \\ \hline \text {Dec 31, 2020 balance sheet value}\\ \text { For the financial asset}\\ \hline \text {Interest income for 2020}\\ \hline \text {Unrealized gain or loss on the}\\ \text {income statement}\\ \hline \text {Total recognized in the income}\\ \text {statement}\\ \hline \text {Unrealized gain or loss in OCI}\\ \hline \text {Total recognized in}\\ \text {comprehensive income}\\ \hline \end{array} \begin{array}{l|} \hline \text {a}\quad\quad\quad\quad\\ \hline \\ \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \end{array} \begin{array}{l|} \hline \text {b}\quad\quad\quad\quad\\ \hline \\ \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \end{array} \begin{array}{l|} \hline \text {c}\quad\quad\quad\quad\\ \hline \\ \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \\ \\ \hline \\ \hline \\ \\ \hline \end{array} \end{array}\)

The answer of On January 1, 2020, a company paid...

Fisher Corporation has the following investments at December 31, 2020: \[\begin{array} { | l | r | r | r | r | } \hline & \text { Historical cost } & \begin{array} { r } \text { Fair value } \\ \text { Sept 30, 2019 } \end{array} & \begin{array} { r } \text { Fair value } \\ \text { Sept 30,2020 } \end{array} & \begin{array} { r } \text { Fair value } \\ \text { Dec 31, } \end{array} \\ \hline \text { Shares of ABC } & 25,000 & 15,000 & 25,000 & 30,000 \\ \hline \begin{array} { l } \text { Bonds of Brooke } \\ \text { (purchased at par value) } \end{array} & 10,000 & 12,000 & 11,000 & 12,500 \\ \hline \begin{array} { l } \text { Shares of CooksTown } \\ \text { Fisher holds 35\% of the } \\ \text { outstanding voting shares of } \end{array} & & & & \\ \text { CooksTown) } & 12,000&18,000 &16,000 &16,000 \\ \hline \text { Shares of Davenport } & 18,000 & 20,000 & 19,000 & 19,000 \\ \hline \end{array}\] -Refer to the above table.If Satellite irrevocably elected to classify its investment in Davenport at fair value through OCI, what amount will be reported for the investment at September 30, 2020?

A) $1,000 B) $18,000 C) $19,000 D) $20,000 A) $1,000 B) $18,000 C) $19,000 D) $20,000

On January 1, 2020, a company paid $100,000 to purchase 100 Government of Canada bonds that have a maturity date of December 31, 2024 and pay interest at 4%. At December 31, 2020, the bonds had a quoted price of $1,050 per bond. Fill in the attached table assuming a. Classified at fair value through profit or loss b. Classified at fair value through other comprehensive income \[\begin{array} { | l | l | l | } \hline & \mathbf { a } & \mathbf { b } \\ \hline \text { Financial asset category for the } & & \\ \text { balance sheet } & & \\ \hline \text { Accounting method that should } & & \\ \hline \text { be used } & & \\ \hline & & \\ \hline \text { Tec } 31,2020 \text { balance sheet value } & & \\ \text { for the financial asset } & & \\ \hline \text { Interegt income for 2020 } & & \\ \hline \text { Inrealized gain or loss on the } & & \\ \text { income statement } & & \\ \hline \text { Total recognized in the income } & & \\ \text { statement } \\ \hline \text { Jnrealized gain or loss in DCI } & & \\ \hline \text { Total recognized in } \\ \text { comprehensive income } & & \\ \hline \end{array}\]

The answer of On January 1, 2020, a company paid...

Amacon Corporation has the following investments at December 31, 2020: $\begin{array}{|l|r|r|r|r|} \hline & \text { Historical cost } & \begin{array}{r} \text { Fair value } \\ \text { Sept } 30,2019 \end{array} & \begin{array}{r} \text { Fair value } \\ \text { Sept 30, 2020 } \end{array} & \begin{array}{r} \text { Fair value } \\ \text { Dec 31, 2020 } \end{array} \\ \hline \text { Shares of DEF } & \$ 25,000 & \$ 15,000 & \$ 25,000 & \$ 30,000 \\ \hline \begin{array}{l} \text { Bonds of Brooke } \\ \text { (purchased at par value) } \end{array} &10,000 &12,000 & 11,000 & 12,500 \\ \hline \text { Shares of CooksTown } & 12,000 & 18,000 & 16,000 & 16,000 \\ \hline \text { Shares of Daisy } & 18,000 & 16,500 & 19,500 & 20,500 \\ \hline \end{array}$ -According to the above table.Amacon, whose year-end is Sept. 30, purchased the share of Daisy on January 1, 2019. If Amacon irrevocably elected to classify its investment in Daisy at fair value through OCI, what amount will be reported in other comprehensive income at September 30, 2020?

A) $1,500 gain. B) $2,500 gain. C) $3,000 gain. D) $19,500 A) $1,500 gain. B) $2,500 gain. C) $3,000 gain. D) $19,500

Exam 7: Financial Assets

On January 1, 2020, a company pays $100,000 to purchase 100 Government of Canada bonds that have a maturity date of December 31, 2024 and an interest rate of 5%. At December 31, 2020, the bonds had a quoted price of $1,022 per bond. Assume that 20 of these bonds are sold on June 30, 2021 for $1,100 per bond plus accrued interest. Determine the gain or loss that would be recorded in 2021 assuming: a. Classified at fair value through profit or loss. b. Classified at amortized cost.

(Essay)

4.8/5

(73)

Question 61

Amacon Corporation has the following investments at December 31, 2020: Historical cost Fair value Sept 30,2019 Fair value Sept 30, 2020 Fair value Dec 31, 2020 Shares of DEF \ 25,000 \ 15,000 \ 25,000 \ 30,000 Bonds of Brooke (purchased at par value) 10,000 12,000 11,000 12,500 Shares of CooksTown 12,000 18,000 16,000 16,000 Shares of Daisy 18,000 16,500 19,500 20,500 -According to the above table.If Amacon classifies its investment in DEF at fair value through profit or loss, what amount will be reported in other comprehensive income at December 31, 2020?

(Multiple Choice)

4.7/5

(78)

Question 62

What factor is important in classifying an investment at fair value through profit or loss?

(Multiple Choice)

4.7/5

(90)

Question 63

Philips has a 50% joint operation interest in Josef. Based on the following information, what amount will be presented for current assets on Philips' proportionately consolidated balance sheet? Philips Josef Current assets \ 500 \ 550 Long-term assets 300 50 Investment in investee 200 0 Current liabilities 350 200 Long-term liabilities 450 300 Equity 200 100

(Multiple Choice)

4.9/5

(70)

Question 64

Copi Corp. purchased a bond with a maturity value of $60,000 payable in five years. These bonds have a 7% coupon rate payable annually. Copi paid $65,195 for these bonds, giving a yield of 5%. Required: Prepare an amortization schedule that shows the amortized cost of this bond at the end of each of five years and the amount of interest income for each of those five years. Year Beginning Amortized cost Interest income Coupon payment Ending amortized cost 1 2 3 4 5

(Essay)

4.9/5

(72)

Question 65

On January 1, 2020, a company paid $100,000 to purchase 100 Government of Canada bonds that mature on December 31, 2024 and pay interest at 5%. At December 31, 2020, the bonds had a quoted price of $1,022 per bond. Fill in the attached table assuming a. Classified at fair value through profit or loss b. Classified at fair value through other comprehensive income c. Classified at amortized cost Financial asset category for the balance sheet Accounting method that should be Used Dec 31, 2020 balance sheet value For the financial asset Interest income for 2020 Unrealized gain or loss on the income statement Total recognized in the income statement Unrealized gain or loss in OCI Total recognized in comprehensive income a b c

(Essay)

4.8/5

(76)

Question 66

Explain the nature of and the impact on the balance sheet and the income statement of at fair value through profit or loss securities and at fair value through OCI securities.

(Essay)

4.8/5

(96)

Question 67

On January 1, 2019, Anny Marine Supplies purchased a Government of Canada bond at par for $12,000. The bond has an interest rate of 7% and matures in three years. By December 31, 2019, market interest rates had increased such that the fair value of the bond decreased to $11,600. The fair value of the bond decreased further to $11,200 on December 31, 2020 (two years after purchase). Required: Assume that Anny classifies the investment at amortized cost. a. At what value should Anny report the bond on its December 31, 2019 balance sheet? b. How much income or loss should Anny report in 2019 in relation to this bond? c. How much other comprehensive income (OCI)should Anny report in 2019 in relation to this bond?

(Essay)

4.8/5

(87)

Question 68

Fisher Corporation has the following investments at December 31, 2020: Historical cost Fair value Sept 30, 2019 Fair value Sept 30,2020 Fair value Dec 31, Shares of ABC 25,000 15,000 25,000 30,000 Bonds of Brooke (purchased at par value) 10,000 12,000 11,000 12,500 Shares of CooksTown Fisher holds 35\% of the outstanding voting shares of CooksTown) 12,000 18,000 16,000 16,000 Shares of Davenport 18,000 20,000 19,000 19,000 -Refer to the above table.If Satellite irrevocably elected to classify its investment in Davenport at fair value through OCI, what amount will be reported for the investment at September 30, 2020?

(Multiple Choice)

4.8/5

(82)

Question 69

Invest Up Hardware operates a chain of hardware stores. Recent operations have been stable and profitable, resulting in a significant amount of cash inflows. During the past fiscal year ended December 31, the company made a number of investments, as described below. a. Invest Up bought 30,000 shares of Machine Mart, a supplier of equipment for construction and renovations. With in-depth knowledge of the hardware retailing business, Invest Up's management believes that Machine Mart's shares are undervalued and that the company could make a quick profit selling the shares within the next 12 months. Invest Up purchased the shares at $18 each, and received $0.30 per share dividends during the year. The shares traded at $29 at the fiscal year-end. b. The company purchased 12,000 units of a mutual fund which cost $28 each. Management had no specific trading intentions for this investment; rather, it was a means of parking excess cash. At the end of the year, the units had a quoted market value of $24. c. At the beginning of the year, Invest Up bought 25% of the common shares in Builder Bee, one of its smaller suppliers, for $6 million. These shares had a fair value of $6.6 million at the end of the year. During the year, Builder Bee reported net income of $1,500,000 and paid total dividends of $10,000 Required: Determine how Invest Up should report the above investments in its financial statements. Include both the effects on the balance sheet and the statement of comprehensive income.

(Essay)

4.8/5

(70)

Question 70

Which statement is correct about financial instruments?

(Multiple Choice)

4.8/5

(83)

Question 71

Which of the following statements is TRUE about the equity method of accounting?

(Multiple Choice)

5.0/5

(86)

Question 72

On January 1, 2019, Cadance Company purchased bonds with a maturity value of $100,000 for $80,747. These bonds have a 12% coupon rate payable semi-annually on June 30 and December 31. The bond matures on December 31, 2023. On January 1, 2019, the market yield for bonds of equivalent risk and maturity was 18%. Required: Prepare an amortization schedule that shows the amortized cost of this bond at the end of each of five years and the amount of interest income for each of those five years. Year Beginning Amortized cost Interest income Coupon payment Ending amortized cost

(Essay)

4.8/5

(89)

Question 73

On January 1, 2019, the Polka Dot Company acquired a $20 million face value bond that has an 11% coupon rate (paying interest annually on December 31). The bond matures on December 31, 2024. On January 1, 2019 the market yield for bonds of equivalent risk and maturity was 9%. Required: a. How much did Polka Dot pay for this bond on January 1, 2019? b. On December 31, 2019, the market yield for bonds of equivalent risk and maturity is 10%. What would be the market value of this bond on December 31, 2019 immediately after the coupon payment? c. On December 31, 2020, the market yield for bonds of equivalent risk and maturity is 11%. What would be the market value of this bond on December 31, 2020 immediately after the coupon payment? d. Assume each of three scenarios: the bond is classified as (i)amortized cost, (ii)at fair value through other comprehensive income, or (iii)at fair value through profit or loss: •How much would the balance sheet value of this bond be on December 31, 2019 and December 31, 2020? •How much income would be reported in 2019 and 2020 for this bond? •How much would other comprehensive income (OCI)and accumulated OCI be for fiscal years 2019 and 2020?

(Essay)

4.8/5

(78)

Question 74

On January 1, 2020, The Freedom Company purchased a $5 million face value bond that pays interest at 7% when the market yield for bonds of equivalent risk and maturity was 5%. Interest is payable annually on December 31. The bond matures on December 31, 2025. Required: a. How much did The Freedom Company pay for this bond on January 1, 2020? b. On December 31, 2020, the market yield for bonds of equivalent risk and maturity is 6%. What would be the market value of this bond on December 31, immediately after the coupon payment on that date? c. On December 31, 2021, the market yield for bonds of equivalent risk and maturity is 7%. What would be the market value of this bond on December 31, immediately after the coupon payment on that date? d. For each of three scenarios: (i)amortized cost, (ii)FVOCI, and (iii)FVPL: i.What would be the balance sheet value of this bond be on December 31, 2020? ii.How much income would be reported in profit or loss in 2020 for this bond? iii.How much other comprehensive income would be reported in 2020 for this bond? iv.How much comprehensive income would be reported in 2020 for this bond?

(Essay)

4.8/5

(89)

Question 75

Which statement is correct about a financial instrument?

(Multiple Choice)

4.9/5

(71)

Question 76

On January 1, 2020, a company paid $100,000 to purchase 100 Government of Canada bonds that have a maturity date of December 31, 2024 and pay interest at 4%. At December 31, 2020, the bonds had a quoted price of $1,050 per bond. Fill in the attached table assuming a. Classified at fair value through profit or loss b. Classified at fair value through other comprehensive income Financial asset category for the balance sheet Accounting method that should be used Tec 31,2020 balance sheet value for the financial asset Interegt income for 2020 Inrealized gain or loss on the income statement Total recognized in the income statement Jnrealized gain or loss in DCI Total recognized in comprehensive income

(Essay)

4.9/5

(70)

Question 77

Explain the meaning of and give an example for the following categories of financial instruments: equity, a derivative, or debt.

(Essay)

4.8/5

(86)

Question 78

Which statement is correct about an equity instrument?

(Multiple Choice)

4.8/5

(83)

Question 79

Amacon Corporation has the following investments at December 31, 2020: Historical cost Fair value Sept 30,2019 Fair value Sept 30, 2020 Fair value Dec 31, 2020 Shares of DEF \ 25,000 \ 15,000 \ 25,000 \ 30,000 Bonds of Brooke (purchased at par value) 10,000 12,000 11,000 12,500 Shares of CooksTown 12,000 18,000 16,000 16,000 Shares of Daisy 18,000 16,500 19,500 20,500 -According to the above table.Amacon, whose year-end is Sept. 30, purchased the share of Daisy on January 1, 2019. If Amacon irrevocably elected to classify its investment in Daisy at fair value through OCI, what amount will be reported in other comprehensive income at September 30, 2020?

(Multiple Choice)

4.8/5

(75)

Question 80

What factor is important in classifying an investment at fair value through profit or loss?

Explain the nature of and the impact on the balance sheet and the income statement of at fair value through profit or loss securities and at fair value through OCI securities.

Which statement is correct about financial instruments?

Which of the following statements is TRUE about the equity method of accounting?

Which statement is correct about a financial instrument?

Explain the meaning of and give an example for the following categories of financial instruments: equity, a derivative, or debt.

Which statement is correct about an equity instrument?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue and Recognition

Cash and Receivables

Inventories

Property, Plant and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters