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UGRD-ACTG6141-2122S

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Week 8: Lesson 6: Accounting for Investments in Equity and Debt Instruments (covered by IAS 32, IAS 39 and IFRS 9) II /
Midterm Quiz

Started on Thursday, 21 April 2022, 6:46 AM

State Finished
Completed on Thursday, 21 April 2022, 7:07 AM
Time taken 20 mins 55 secs
Marks 4.00/10.00
Grade 40.00 out of 100.00

Question 1
Complete

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When the equity method is used to account for investments in common stock, which of the following affects the investors reported
investment income?

Select one:
a. Equipment amortization related to purchase (No); Cash dividends from investee (Yes)

b. Equipment amortization related to purchase (No); Cash dividends from investee (No)

c. Equipment amortization related to purchase (Yes); Cash dividends from investee (Yes)

d. Equipment amortization related to purchase (Yes); Cash dividends from investee (No)

Question 2
Complete

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It is a financial instrument that derives its value from another underlying item such as a share price, exchange rate or interest rate.

Select one:
a. Derivative

b. Financial asset

c. Financial liability

d. Equity instrument
Question 3
Complete

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When an investment previously classified as held for sale no longer meets the criteria to be so classified, it must be accounted for using th
equity method retrospectively, as from the date that it was classified as held for sale.

Select one:
a. False

b. True

Question 4
Complete

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A change from the cost method to the equity method of accounting for an investment in common stock resulting from an increase in the
number of shares held by the investor requires;

Select one:
a. that the change be accounted for as an unrealized gain included in other comprehensive income

b. only a footnote disclosure

c. retroactive restatement as if the investor always had used the equity method

d. that the cumulative amount of the change be shown as a line item on the income statement, net of tax

Question 5
Complete

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Wrath Co. uses the equity method to account for its January 1, 2003 purchase of Anger Inc.s common stock. On January 1, 2003, the fair
values of Angers FIFO inventory and land exceeded their carrying amounts. How do these excesses of fair values over carrying amounts af
Wraths reported equity in Angers 2003 earnings?

Select one:
a. Inventory excess (Increase); Land excess (No effect)

b. Inventory excess (Decrease); Land excess (No effect)

c. Inventory excess (Increase); Land excess (Increase)

d. Inventory excess (Decrease); Land excess (Decrease)

Question 6
Complete

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An independent trustee holds cash in the sinking fund account representing the annual deposits to the fund and interest earned on these
deposits. How should the sinking fund be classified in the balance sheet?

Select one:
a. The entire balance in the sinking fund is classified as current asset

b. The cash in the sinking fund is classified a current asset.

c. The entire balance in the sinking fund is classified as noncurrent asset.

d. The accumulated deposits only are shown as long term investment

Question 7
Complete

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Which is not a current fund?

Select one:
a. Payroll fund

b. Petty cash fund

c. Sinking fund

d. Tax fund

Question 8
Complete

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It is a contractual arrangement whereby two or more parties undertake an economic activity which is subject to join control.

Select one:
a. Partnership

b. Joint undertaking

c. Joint venture

d. Joint operation
Question 9
Complete

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Which of the following is true for a bond maturing on a single date when the effective interest method of amortizing bond discount is use

Select one:
a. Interest expense as a percentage of the bond's book value varies from period to period

b. Interest expense increases each 6 month period

c. Nominal interest rate exceeds effective interest rate

d. Interest expense remains constant each 6 month period

Question 10
Complete

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Which of the following best describes a swap?

Select one:
a. traded on an organized exchange and is customized to meet the needs of the parties.

b. not traded on an organized exchange and is customized to meet the needs of the parties.

c. traded on an organized exchange and is subject to formal regulations which results in standardized contrasts.

d. not traded on an organized exchange and is subject to formal regulations which results in standardized contrasts

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