Question

1)Each of the three categories of investments in debt and equity securities has similar accounting for all of the following transactions except

recognition of dividend and interest income

initial recording of cost

recognition of unrealized holding gains and losses

recognition of realized gains or losses on sales

2)Capitalized interest for a constructed asset cannot exceed actual interest costs.

True

False

3)Under the full-cost method, only the costs associated with the exploration that resulted in the successful discovery of oil and gas can be capitalized.

True

False

4)When a life insurance policy contains a guarantee that the company that purchased the policy is entitled to a return equal to the amount of the cash surrender value of the policy, a portion of the premium is recorded to a long term liability account.

True

False

5)U.S. GAAP allows a company to capitalize more of the costs of internally generated assets than allowed under IFRS.

True

False

Answer 1

Ans 1
D) Recognition of realized gain or losses on sales
As in the trading securities unrealized gain ad losses are reognized in the income statement so when securities are sold the realized gains are different companre to AFS and HTM securities
ans 2
True
As the actual interest cost is the maximum interest cost that
can be allowed hence the capitalized interest cost cannot exceed it.
ans 3
FALSE
The successful effort method is used for the same
ans 4
TRUE
ans 5
FALSE
IFRS allows it to be capitalize

If any doubt please comment