FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 13: Investments and Fair Value Accounting

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

The account Valuation Allowance for Trading Securities is found on the:

A) Income statement as Other Revenue (Expenses)
B) Balance sheet as an adjustment to the asset account
C) Balance sheet as an adjustment to Stockholders' Equity
D) Statement of Retained Earnings

E) B) and C)
F) C) and D)

Correct Answer

verified

Show Answer

Question 42

Essay

Review LaterAdd Note

Review Later

Discuss the appropriate financial treatment when an investor has a greater than 50% ownership in another company.

Correct Answer

verified

If an investor purchases more than 50% o...

View Answer

Show Answer

Question 43

Essay

Review LaterAdd Note

Mangrill,Inc.reported net income for the year ending December 31,2012 of $483,500.Dividends paid during the year totaled $42,900. The company holds available-for-sale securities with an original cost of $162,000 and a fair value of $171,000 at the end of the year. They also hold trading securities with an original cost of $150,000 and a fair value of $147,000.Retained Earnings on January 1,2012 was $736,400 and Accumulated Other Comprehensive Income on January 1,2012 was $16,200. Required: Calculate the following balances to be reported in the financial statements dated December 31,2012. (1)Valuation Allowance for Available-for-Sale securities (2)Comprehensive Income (3)Retained Earnings (4)Accumulated Other Comprehensive Income

The financial statements resulting from combining parent and subsidiary statements are called consolidated statements.

On October 1,2012,Marcus Corporation purchased $20,000 of 6% bonds of Roberts Corporation,due in 8 1/2 years.The bonds were purchased at a price of $17,561 plus interest of $300 accrued from July 1,2012,the date of the last semi-annual interest payments.Journalize the purchase.

Blanton Corporation purchased 35% of the outstanding shares of common stock of Worton Corporation as a long-term investment.Subsequently,Worton Corporation reported net income and declared and paid cash dividends.What journal entry would Blanton Corporation use to record the dividends it receives from Worton Corporation?

What are the total proceeds from the February 1,2015 sale?

Edison Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock.The market value of the common stock is $80 per share.Edison's dividend yield is:

The equity method causes the investment account to mirror the proportional changes in book value of the investee.

Comprehensive income must be reported on the income statement.

Wendell Company owns 28% of the common stock of Porter Company and accounts for the investment using the equity method.Assuming that Wendell Company purchased the stock several years ago,the balance in the investment account would be equal to the cost of the

Held-to-maturity securities are reported on the balance sheet at fair market value.

An equity investment in less than 20% of another company's stock is accounted for using the cost method.

Present entries to record the following selected transactions of Masterson Co.

Any difference between the fair market values of the securities and their cost is a realized gain or loss.

Investments in bonds that management intends to hold to maturity are called trading securities.

Jacks Corporation purchases $200,000 bonds plus accrued interest for 2 months of $2,000 from Kennedy Company on March 1.The bonds have an annual interest rate of 6% payable on June 30 and December 31.The entry to record the purchase of the bonds would include:

The investor carrying an investment by the equity method records cash dividends received as an increase in the carrying amount of the investment.

The cumulative effects of other comprehensive income items must be reported separately from retained earnings and paid-in capital,on the balance sheet,as accumulated other comprehensive income.

As with other assets,the cost of a bond investment includes all costs related to the purchase.