Question

Available-for-sale securities are recorded at cost, which equals fair value on the acquisition date. Select one:...

Available-for-sale securities are recorded at cost, which equals fair value on the acquisition date.

Select one:

True

False

Homework Answers

Answer #1

Available for sale securities are reported at fair value as on the date of balance sheet. Any unrealized gain or losses are not recognised in the income statement but are reported in other comprehensive income which is a part of shareholders equity.

Therefore it won't be correct to say that available-for-sale securities are recorded cost which equals to fair value on acquisition day because any changes in the fair value of the securities are to be recorded as on the date of balance sheet.

Therefore the correct option is False

If you find the answer helpful please upvote

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
exercise 15-9 Fair value adjustment to available-for-sale securities LO P3 Prescrip Co. began operations in 2016....
exercise 15-9 Fair value adjustment to available-for-sale securities LO P3 Prescrip Co. began operations in 2016. The cost and fair values for its long-term investments portfolio in available-for-sale securities are shown below. Prepare the December 31, 2017, adjusting entry to reflect any necessary fair value adjustment for these investments. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Portfolio of Available-for-Sale Securities Cost Fair Value December 31, 2016 $ 66,974 $...
1) The amount of change in the fair value of an investment classified as trading securities...
1) The amount of change in the fair value of an investment classified as trading securities is: a. reported as Investment Income or Investment Expense. b. is taken into account only at the time of sale. c. ignored unless permanent drop in value occurs. d. included within stockholders' equity section. e. included in the net income. 2) Gain or loss on sale of trading securities is calculated as a difference between the sales price and the: a. fair value or...
Fair Value Journal Entries, Available-for-Sale Investments Storm, Inc. purchased the following available-for-sale securities during Year 1,...
Fair Value Journal Entries, Available-for-Sale Investments Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations: Name Number of Shares Total Cost Dust Devil, Inc. 1,100 $34,650 Gale Co. 400 28,600 Whirlwind Co. 2,500 77,500 Total $140,750 The market price per share for the available-for-sale security portfolio on December 31, Year 1 was as follows: Market Price per Share Dec. 31, Year 1 Dust Devil, Inc $22 Gale Co. 78 Whirlwind Co. 30 a. Provide...
At December 31, the Long-Term Investments (Available-for-sale securities or “AFS”) had a fair value of $180,190....
At December 31, the Long-Term Investments (Available-for-sale securities or “AFS”) had a fair value of $180,190. The AFS Investment was originally purchased on May 1, 2017 for $160,500. CMC uses a “Fair Value Adjustment” account (an adjunct/contra account to the Investments) to mark-to-market the investment portfolio at year end. CMC’s tax rate is 21%. What is the Adjusting Journal Entry for this?
In its first year of operations, Crane Corporation purchased, as a long-term investment, available-for-sale debt securities...
In its first year of operations, Crane Corporation purchased, as a long-term investment, available-for-sale debt securities costing $66,000. At December 31, 2020, the fair value of the securities is $61,400. Prepare the adjusting entry to record the securities at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit...
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L...
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L purchased Coca-Cola bonds at par for $892,000 and sold the bonds on January 3, 2019, for $900,000. At December 31, the bonds had a fair value of $885,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2018 and (b) the sale of the bonds...
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L...
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L purchased Coca-Cola bonds at par for $892,000 and sold the bonds on January 3, 2019, for $900,000. At December 31, the bonds had a fair value of $885,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2018 and (b) the sale of the bonds...
If the market value is lower than the cost of trading or available-for-sale investments, the investment...
If the market value is lower than the cost of trading or available-for-sale investments, the investment is written down to market only if the decline is permanent and not temporary. Question 12 options: a) True b) False Question 13 (1 point) Saved If the market value is lower than the cost of a held-to-maturity investment, the investment is written down to market only if the decline is permanent and not temporary. Question 13 options: a) True b) False Question 14...
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L...
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L purchased Coca-Cola bonds at par for $900,000 and sold the bonds on January 3, 2019, for $908,500. At December 31, the bonds had a fair value of $893,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2018 and (b) the sale of the bonds...
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L...
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L purchased Coca-Cola bonds at par for $894,000 and sold the bonds on January 3, 2019, for $901,500. At December 31, the bonds had a fair value of $890,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2018 and (b) the sale of the bonds...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT