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Which true about equity method in accounting for investment

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Reference no: EM132959416

Problem 1: The carrying value of the investment in debt securities at amortized cost purchased at an amount which exceeds its face value, is ___________________ by the amount of the ___________________.

a. Increased; premium amortization

b. Decreased; premium amortization

c. Increased; discount amortization

d. Decreased; discount amortization

Problem 2: Which of the following is true assuming the debt securities designated initially as FVPL was reclassified to FVOCI?

a. Gain or loss on remeasurement on reclassification date is reported in profit or loss

b. Initial carrying value of FVOCI is the amortized cost on reclassification date

c. Interest income subsequent to reclassification date is the nominal interest

d. UG/UL taken to equity subsequent to reclassification date is the difference

between the amortized cost and fair value

Problem 3: Which of the following is true about equity method in accounting for investment in associate?

a. Investment should be carried at the balance sheet date at fair value less cost to sell

b. Impairment loss shall be recognized if recoverable value is lower than carrying amount

c. Transaction cost should be expensed outright at initial recognition

d. Dividend received is reported in the income statement

Reference no: EM132959416

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