9. Investments in bonds may be classified as trading securities available-for-sa
ID: 2519284 • Letter: 9
Question
9. Investments in bonds may be classified as trading securities available-for-sale securities, and held-to-maturity securities. 10. Z Company has significant influence over G Company and owns 40% of the voting stock of G Company, Z Company needs to use the fair value method of accounting for the investment in G Company 11. Unrealized gains and losses from trading securities that result from the change in fair value during the period must be reported on the income statement. 12. The temporary gains or losses from held-to-maturity must be reported in income for the current year. 13. The equity method of accounting requires that a company adjust 14. Held-to-maturity securities are carried at fair value using the 15. Stock Appreciation rights are a form of compensation that allows 16. Stock options are a form of compensation which allows employees the cost of the investment to fair value at the end of each period. effective interest method employees to purchase shares at a specific price to receive stock or cash for the difference between stated value and the market value.Explanation / Answer
9. False. Investments are not classified on the basis of securities.
10. False. It needs to use the Equity Value Method as it has significant control over the other entity.
11. True. Onlt the unrealized gains and losses that result in the change in fair value are reported in the income statement.
12. True. These sre considered as short term investments and are recorded in the income statement for the current year.
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