Question #27
Reading: Reading 8 Intercorporate Investments
PDF File: Reading 8 Intercorporate Investments.pdf
Page: 11
Status: Incorrect
Correct Answer: A
Your Answer: B
Question
Accounting standards for intercorporate investments establish different categories of securities with distinct ways of treating them on the financial statements of the company. One category requires the securities to be carried at fair value on the balance sheet with unrealized gains and losses excluded from the income statement. This category of security classification is called debt:
Answer Choices:
A. and equity securities classified as fair value through OCI
B. securities classified at amortized cost
C. and equity classified as fair value through P&L securities
Explanation
If securities are designated as debt and equity securities classified as fair value through
OCI they are to be carried at fair value on the balance sheet with unrealized gains and
losses excluded from the income statement (but go into equity via OCI).