SOFE SOFE Certification SOFE-CFE Questions & Answers

• Question 51:

  Which of the following is NOT the permitted hedge relationships identified by FASB?

  A. hedges of fair value exposures

  B. hedges of formal inception

  C. hedges of cash flow exposures

  D. hedges of foreign currency exposures

  Correct Answer: B

• Question 52:

  In general, a variable interest entity is subject to consolidation if it has:

  A. an insufficient amount of equity

  B. a group of equity owners that are unable to make decisions

  C. equity that does not absorb the entity's losses or receive the entity's benefits

  D. All of the above

  Correct Answer: D

• Question 53:

  What is represented between a 20 percent and 50 percent interest generally are reported using the equity method of accounting?

  A. Intellectual investments

  B. Investments in subsidiaries

  C. Accrual accounting

  D. weighted-potential investment

  Correct Answer: B

• Question 54:

  What received from an investee are recognized in investment income when declared to the extent that they are not in excess of the undistributed accumulated earnings attributable to the investee.

  A. Income investment

  B. Consolidation

  C. Accounting interpretation

  D. Dividends

  Correct Answer: D

• Question 55:

  If the subsidiary subsequently reports gross income, the insurer resumes applying the equity method only after its share of that gross income equals the share of net losses not recognized during the period that the equity method was suspended.

  A. True

  B. False

  Correct Answer: B

• Question 56:

  Furniture, fixtures and equipment, leasehold improvements, non-admitted assets, prepaid expenses are all adjustments required for:

  A. noninsurance subsidiaries

  B. insurance pre-requisites

  C. reinsurance statutory

  D. None of the above

  Correct Answer: A

• Question 57:

  Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method including anticipated prepayments.

  A. True

  B. False

  Correct Answer: A

• Question 58:

  If an insurance company actively buys and sells bonds and does not intend to hold the bonds to maturity, bonds are reported at market values and temporary changes in the market values of bonds are included in earnings, this is called:

  A. intermediate bond sharing

  B. Securities Valuation Office

  C. trading securities

  D. held-to-maturity securities

  Correct Answer: C

• Question 59:

  Certain assets that normally are recognized under GAAP are excluded from the statutory balance sheet and are referred to as:

  A. non-reliance assets

  B. unrecognized assets

  C. non-accountable assets

  D. non-admitted assets

  Correct Answer: D

• Question 60:

  Under _________________, assets are defined as probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

  A. insurance accountability

  B. statutory accounting practices

  C. generally accepted accounting principles

  D. accounting principles of performance

  Correct Answer: C