Advanced Accounting: Chapter 1 Quiz
On January 1, 2016, a company's balance sheet reports its investments in financial instruments as follows:
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Assets
Investment in trading securities: $170,000
Investment in AFS securities: 90,000
Investment in HTM securities: 228,299
Equity
Accumulated other comprehensive income:
Unrealized gains (losses) on AFS securities: $5,000
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Additional information:
a. The HTM securities are $220,000 face value debt securities purchased on January 1, 2014, at a yield of 4%. The securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 6%.
b. The trading securities on hand on January 1 were sold in 2016 for $190,000.
c. More trading securities were purchased for $110,000. They are still on hand at December 31, 2016, and have a fair value of $115,000.
d. AFS securities, originally purchased for $28,000 with a carrying value of $26,000 as of January 1, 2016, were sold for $32,000.
e. AFS securities on hand at December 31, 2016, have a fair value of $83,000
The total gain on trading securities reported on the 2016 income statement is...
$25,000
$190,000 – $170,000 = $20,000
$115,000 – $110,000 = 5,000
Total gain $25,000
On January 1, 2016, a company's balance sheet reports its investments in financial instruments as follows:
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Assets
Investment in trading securities: $165,000
Investment in AFS securities: 95,000
Investment in HTM securities: 217,922
Equity
Accumulated other comprehensive income:
Unrealized gains (losses) on AFS securities: $4,500
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Additional information:
a. The HTM securities are $210,000 face value debt securities purchased on January 1, 2014, at a yield of 4%. The securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 6%.
b. The trading securities on hand on January 1 were sold in 2016 for $185,000.
c. More trading securities were purchased for $105,000. They are still on hand at December 31, 2016, and have a fair value of $120,000.
d. AFS securities, originally purchased for $27,000 with a carrying value of $24,000 as of January 1, 2016, were sold for $32,000.
e. AFS securities on hand at December 31, 2016, have a fair value of $85,000
The gain on AFS securities reported on the 2016 income statement is...
$5,000
$40,000 – $35,000 = $5,000
On January 1, 2016, a company's balance sheet reports its investments in financial instruments as follows:
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Assets
Investment in trading securities: $175,000
Investment in AFS securities: 95,000
Investment in HTM securities: 213,961
Equity
Accumulated other comprehensive income:
Unrealized gains (losses) on AFS securities: $5,500
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Additional information:
a. The HTM securities are $210,000 face value debt securities purchased on January 1, 2014, at a yield of 4%. The securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 5%.
b. The trading securities on hand on January 1 were sold in 2016 for $210,000.
c. More trading securities were purchased for $115,000. They are still on hand at December 31, 2016, and have a fair value of $130,000.
d. AFS securities, originally purchased for $25,000 with a carrying value of $24,000 as of January 1, 2016, were sold for $30,000.
e. AFS securities on hand at December 31, 2016, have a fair value of $79,000
Investment in HTM securities reported on the December 31, 2016 balance sheet is...
$212,019
$213,961 – [(6% x $210,000) – (4% x $213,961)] = $212,019
Under current standards, when is an impairment loss reported on a significant influence investment in the stock of another company, following U.S. GAAP and IFRS?
U.S. GAAP
Other than temporary impairment
IFRS
Book value > higher of market value or value-in-use
Fizzy Cola acquires Juicee Ltd. for $30,000,000 in cash, and accounts for its investment as a merger. Juicee's balance sheet at the date of acquisition is as follows:
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Current assets $200,000 Liabilities $3,000,000
Property, net 4,100,000 Equity 1,300,000
Total $4,300,000 Total $4,300,000
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The fair value of Juicee's current assets is $100,000 less than book value. The fair value of its property is $1,500,000 less than book value. The book value of its liabilities approximates fair value. There are no unreported assets or liabilities.
How much goodwill does Fizzy report for this acquisition?
$30,300,000
Current assets 100,000
Property 2,600,000
Goodwill 30,300,000
Liabilities 3,000,000
Cash 30,000,000