ACC 102_Investment in Equity Securities

It is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

• Equity instrument
• Debt instrument
• Loan and receivable
• Loans receivable

Specifically, these securities represent ownership shares such as common stock, preferred stock and other capital stock.

• Equity securities
• Debt securities
• Marketable securities
• Current investments

When current investments are carried at market value

• Unrealized gains or losses are not recognized
• Unrealized gains and losses are recognized and included in equity
• Unrealized gains and losses are recognized and included in the determination of income
• Current assets

Long-term investments are

• Acquired primarily for accretion of wealth
• Readily realizable
• Classified as current assets
• Intended to be held for more than one year

It is when the shares are sold, they carry with them the right to receive dividends.

• Between the date of declaration and the date of record
• Between the date of declaration and the date of payment
• Between the date of record and the date of payment
• Between the date of payment and the date of declaration

It is the date when the dividends shall be recognized as revenue.

• Date of declaration
• Date of record
• Date of payment
• Date of mailing

Property dividends are recorded at

• At cost
• Present value
• Historical cost
• Fair value

When equity shares are of the same class acquired on different dates at different costs, a problem will arise as to the determination of cost of shares sold when only a portion is subsequently sold. In such a case, the entity shall determine the cost of the shares sold using either

• FIFO and average cost approach
• LIFO and average cost approach
• FIFO and LIFO
• FIFO and retail cost approach

When the liquidating dividends exceed the cost investment, the difference is

• Debited to gain on investment
• Credited to gain on investment
• Debited to loss on investment
• Credited to loss on investment

Share dividends of the same class are recorded only by means of

• Adjusting entry
• Journal entry
• Memorandum entry
• No entry