. ABC Corp acquired bonds at a discount and plans to sell these bonds in the near term to take advantage of the fluctuations in fair values for short term profit ABC should account for this investment as: Cost Amortized Cost FVPL FVOCI
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2.
ABC Corp acquired bonds at a discount and plans to sell these bonds in the near term to take advantage of the fluctuations in fair values for short term profit ABC should account for this investment as:
Cost
Amortized Cost
FVPL
FVOCI
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Solved in 2 steps
- When an investment in an available-for-sale debt security is transferred to trading because the company anticipates selling the security in the near future, the carrying value assigned to the investment when transferring it to the trading portfolio should be O the higher of its original cost or its fair value at the date of the transfer. O the lower of its original cost or its fair value at the date of the transfer. O its fair value at the date of the transfer. O its original cost.REQUIREMENTS: 1. How much is the cost of equity using the capital asset pricing model? 2. How much is the cost of equity using the bond plus risk premium?Which one of the following is short-term source of working capital finance? Retained Profit Factoring service Non-convertible bond Retained profit and factoring service.
- Which of the following will increase a firm's aftertax cost of debt financing? Select one: a. increase in a bond's current market price b. decrease in the corporate tax rate c. increase in the dividend yield d. decrease in the market rate of interestAccording to the Capital Asset Pricing Model (CAPM), underpriced securities have ___________ Group of answer choices a. positive betas. b. zero alphas. c. negative betas. d. positive alphas.1. When the effective cost of debt is greater its the nominal cost,a. the initial net measurement of the bond is more than the face value.b. The net proceeds is more than the face value.c. The entity records a discount on the bond payable.d. The interest expense is less than the interest payments.2. Which of these statement are true? [S1] The dividend decision generally involves the same factors as the earnings retention decision. [S2] Under the Dividend Relevance Theory, dividends are valued more than capital gains.3. The cost of retained earnings is less than the cost of ordinary shares because ofa. the issuance cost.b. the trust fund doctrine.c. agency costs of free cash flow.d. the taxation on earnings.4. GHI Corp., a new and relatively unknown entity, has issued 5-year bonds with an interest rate of 30%. These may also be traded in by the holder for 5 ordinary shares for every P1,000 face value of the bond. GHI added this feature so that once it has better profits, it can entice…
- 1. According to PFRS 9, The amortized cost of a financial instrument is calculated using. A. The effective interest method. B. The straight line method C. A or b D. Choice a however, the straight line method can be used in some circumstances. 2. The amortization of a discount on an investment in bonds measured at amortized cost A. Increases the carrying amount of the investment B. Is the excess of interest income over interest received or receivable. C. Is recorded directly to the invesment account D. All of these 3. Which of the following statements is correct for an investment in term bonds that was acquired at a premium? A. The amortized cost of the bonds increases annually. B. The current and non current portions of the bonds as of the reporting date are reported separately. C. The interest income recognized each year is higher than the amount of interest received/ receivable. D. The effective interest rate is lower than the stated rate of the bonds. 4. The rate…a. How much is the cost of equity using the capital asset pricing model? b. How much is the cost of equity using the bond plus risk premium?BM Co did not amortize the discount on its short-term bond investment. What effect would this have of the carrying value of the investment and on net income, respectively? A. overstated, overstated B. understated, overstated C. understated, understated D. no effect, no effect
- 15. Which of the following statements regarding available-for-sale equity investments is true? a. The realized gain on sale is determined by comparing the carrying value of the investment with its selling price.b. Income is affected by temporary changes in market value.c. All equity security investments are classified as noncurrent.d. Permanent declines in value are reported on the income statement.For investment in equity securities carried as FVOCI under PFRS 9, the difference between the carrying value of the investment and its related cumulative unrealized gain or loss-OCI is A. its unrealized gain or loss reported as a component of OCI for the period. B. its unrealized gain or loss reported under profit or loss for the period. C. its initial cost D. Its amortized costStock returns are unlimited while returns on debt investments are limited to interest payments and any capital gain generated by the difference between the purchase price and par value (assuming the debt is owned to maturity). t/f?
