121.A year-end analysis of Valencia Inc.'s equity securities portfolio acquired in 2014 shows the following totals at December 31, 2014 for trading and non-trading securities:
Trading Non-Trading
Securities Securities
Aggregate cost€900,000€1,100,000
Aggregate fair value 700,000 950,000
What amount of unrealized holding loss should Valencia report in its 2014 income statement?
a.€0.
b.€50,000.
c.€150,000.
d.€200,000.
122.At December 31, 2014, Jantzen Corp. had the following trading securities purchasedduring 2014, its first year of operation:
Fair Unrealized
Cost Value Gain (Loss)
Security A CHF 900,000 CHF 700,000 CHF(200,000)
B 150,000 200,000 50,000
Totals CHF1,050,000 CHF 900,000 CHF(150,000)
How will the fair value adjustments for 2014 impact the year's net income?
a.an unrealized holding loss will decrease net income by CHF200,000.
b.an unrealized holding gain will increase net income by CHF50,000.
c.an unrealized holding loss will decrease net income by CHF150,000.
d.unrealized holding gains and losses on trading securities do not impact net income.
123.At December 31, 2014, Greystone Corp. had the following non-trading securities that were purchased during 2014, its first year of operation:
Fair Unrealized
Cost ValueGain (Loss)
Security A£ 170,000£ 180,000£ (10,000)
B 185,000 170,000 15,000
Totals £ 355,000£ 350,000 £ (5,000)
How will the fair value adjustments for 2014 impact the year's net income?
a.an unrealized holding loss will decrease net income by £10,000.
b.an unrealized holding gain will increase net income by £15,000.
c.an unrealized holding loss will decrease £5,000.
d.unrealized holding gains and losses on non-trading securities do not impact net income.
124.On December 31, 2013, Patel Co. purchased equity securities as trading securities. Pertinent data are as follows:
Fair Value
Security Cost At 12/31/14
A Rs932,000 Rs1,032,000
B 468,000508,000
C 688,000478,000
The journal entry to record the fair value adjustment at December 31, 2014 will include
a.a debit to Fair Value Adjustment-Trading for Rs140,000.
b.a debit to Unrealized Loss – Equity for Rs70,000.
c.a debit to Unrealized Loss – Income for Rs70,000.
d.a credit to Unrealized Gain – Income for Rs140,000.
125.Changes from cost are reported as part of net income for
a.non-trading securities.
b.held-for-collection securities.
c.debt securities.
d.trading securities.
126.Short-term investments are listed on the statement of financial position immediately above
a.cash.
b.inventory.
c.accounts receivable.
d.prepaid expenses.
127.Short-term share investments should be valued on the statement of financial position at
a.the lower of cost or fair value.
b.the higher of cost or fair value.
c.cost.
d.fair value.
128.In recognizing a decline in the fair value of short-term share investments, an unrealized loss account is debited because
a.management intends to realize this loss in the near future.
b.the securities have not been sold.
c.the share market is volatile.
d.management cannot determine the exact amount of the loss in value.
129.The Fair Value Adjustment account
a.is set up for each security in the company's portfolio.
b.relates to the entire portfolio of securities held by the company.
c.is closed at the end of each accounting period.
d.appears on the income statement as Other income and expense.
130.The contra-account, Fair Value Adjustment, is also called a(n)
a.offset account.
b.adjustment account.
c.valuation account.
d.opposite account.