6 Questions
How are trading securities reported on the financial statements?
At fair value, with unrealized gains and losses included in earnings
What is the accounting treatment for available-for-sale securities?
Reported at fair value with unrealized gains and losses excluded from earnings and reported in other comprehensive income
How are dividends received from equity investments accounted for?
Dividends are recognized as income for both trading and available-for-sale securities
What is the initial measurement basis for equity investments?
At purchase price
How are equity investments measured after their initial recognition if their fair value is not easily determinable?
They continue to be reported at their original cost
Which of the following statements is true regarding the fair value method for equity investments?
The fair value method is applied to both trading and available-for-sale securities
Test your knowledge on the classification and reporting of equity securities, including trading securities and available-for-sale securities. Understand how unrealized gains and losses are treated differently for each classification.
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