question archive Walsh College ACC 503  1) Newberry purchased XYZ bonds for $80,000 on 1/1/20 and classified the bonds as available-for-sale

Walsh College ACC 503  1) Newberry purchased XYZ bonds for $80,000 on 1/1/20 and classified the bonds as available-for-sale

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Walsh College ACC 503 

1) Newberry purchased XYZ bonds for $80,000 on 1/1/20 and classified the bonds as available-for-sale. The year-end values of these bonds for years 2020-2022 respectively were $82,000, $79,000, and $75,000. Suppose Newberry erroneously accounted for these securities as if they were "Trading" since their purchase. Net Income for 2022 would be:

Select one:

a.$5,000 understated

b.$4,000 understated

c.$1,000 understated

d.$5,000 overstated

e.$7,000 overstated

2) Bonds purchased at a discount that are classified HTM should be on the balance sheet at

Select one:

a.Cost

b.Amortized cost

c.Fair value

d.Lower of cost or market

e. Higher of cost or market

 

Option 1

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