Quiz 12.15 – T/F Amortization of Goodwill under Equity Method of Accounting
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
Under the equity method, goodwill amortization reduces both investment income and account.
Under the equity method, goodwill amortization reduces both investment income and account.
The fair value option for available-for-sale investments results in their reclassification as trading securities.
Investments accounted for using the equity method cannot be designated as fair value through profit or loss (FVTPL) as they represent significant-influence investments.
IFRS 9 and US GAAP use similar reporting classifications for investments in which the investor lacks significant influence.
Debt investments are categorized as “available-for-sale” or “fair value through profit or loss (FVPL)” under IFRS 9.
Debt investments are classified into “amortized cost,” “fair value through profit or loss (FVPL),” or “fair value through other comprehensive income (FVOCI)” categories under IFRS 9.
Equity investments are categorized as “fair value through other comprehensive income (FVOCI)” or “fair value through profit or loss (FVPL)” under IFRS 9.
A debt investment qualifies for amortized cost accounting under IFRS 9 if it includes only interest and principal and the investor intends to hold it for collecting contractual cash flows.
The portion of the premium paid that corresponds to the additional year the insured person remains alive reduces the cash surrender value of a life insurance policy every year.
Which investment category requires investors to demonstrate their “positive intent and ability to hold”?