All of the Following Statements Regarding Accounting for Noninfluential Securities

question 117

Multiple Choice

All of the following statements regarding accounting for noninfluential securities under U.S.GAAP and IFRS are true except:

• A)Trading securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income.
• B)Trading securities are accounted for using fair values with unrealized gains and losses reported in net income.
• C)Available-for-sale securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income.
• D)Held-to-maturity securities are accounted for using amortized cost.
• E)Both systems examine held-to-maturity securities for impairment.

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Definitions:

Risk Premium

A risk premium is the added return an investor needs to compensate for the risks of future payments.

Future Payments

Obligations or amounts of money that are required to be paid at a future date, often relating to loans, financing arrangements, or deferred payment agreements.

Investment Decisions

The process of choosing which assets or projects to invest in, with the aim of maximizing returns or value over time.

Uncertainty

A condition characterized by a lack of comprehensive information, making it unfeasible to precisely portray the current situation, predict future events, or identify multiple potential results.