FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Investments

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

Jacobs Corporation makes a short-term investment in 150 ordinary shares of Starr Company. The shares are purchased for $\$ 50$ a share plus brokerage fees of $\$ 450$ . The entry for the purchase is

A) $\begin{array} { l }\text { Debt Investments } &7,500\\ \text {Cash } &&7,500\\\end{array}$

B) $\begin{array} { l }\text { Share Investments } &7,950\\ \text { Cash} &&7,950\\\end{array}$

C) $\begin{array} { l }\text { Share Investments } &7,500\\ \text { Brokerage Fee Expense} &450\\ \text {Cash } &&7,950\\\end{array}$

D) $\begin{array} { l }\text { Share Investments } &7,500\\ \text {Cash } &&7,500\\\end{array}$

E) None of the above
F) B) and C)

Correct Answer

verified

Show Answer

Question 52

True/False

Review LaterAdd Note

Review Later

Debt investments are investments in government and corporation bonds.

A) True
B) False

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Nagen Company had these transactions pertaining to share investments: Feb. 1 Purchased 3,000 shares of Horton Company (10\%) for $£ 49,800$ cash plus brokerage fees of $£ 1,200$ . June 1 Received cash dividends of $£ 2$ per share on Horton stock. Oct. 1 Sold 1,200 shares of Horton stock for $£ 24,000$ less brokerage fees of $£ 600$ . The entry to record the sale of the shares would include a

Fair value through profit or loss securities are securities bought and held primarily for sale in the near term to generate income on short-term price differences.

Consolidated financial statements are prepared in place of the financial statements for the parent and subsidiary companies.

Under the equity method of accounting for long-term investments in ordinary shares, when a dividend is received from the investee company,

On January 1, 2011, Daley Corporation purchased $30 \%$ of the ordinary shares outstanding of King Corporation for $\$ 600,000$ . During 2011, King Corporation reported net income of $\$ 200,000$ and paid cash dividends of $\$ 100,000$ . The balance of the Share Investments-King account on the books of Daley Corporation at December 31,2011 is

The fair value adjustment for FVPL securities

Which of the following is not true regarding the Market Adjustment - FVPL account?

To be classified as a short-term investment, the investment must be readily marketable and intended to be converted into cash within the next year or operating cycle, whichever is longer.

The Share Investments account is debited at acquisition under both the equity method and cost method of accounting for investments in ordinary shares.

When recording bond interest, Interest Receivable is reported as a fixed asset in the statement of financial position.

which of the following is the correct matching concerning an investor's influence on the operations and financial affairs of an investee? $\begin{array}{ll}\% \text { of Investor Ownership }&\text { Presumed Influence }\\\end{array}$

The cost method of accounting for long-term investments in shares should be employed when the

Companies generally report long-term assets in a separate section immediately above current assets on the statement of financial position.

At December 31, 2010, EI Greco Company has an investment in 1,000 of the €1,000 8% bonds of Dublin Company with a carrying value of €1,060,500.The bonds, which mature on January 1, 2015, pay interest semiannually on July 1 and January 1.After collecting the interest on January 1, 2011, EI Greco sells the bonds for €1,110,000.EI Greco will recognize

If the cost method is used to account for a long-term investment in ordinary shares,

If an investor owns between 20% and 50% of an investee's ordinary shares, it is presumed that the investor has significant influence on the investee.

The cost of debt investments includes brokerage fees and accrued interest.

Dividends received on share investments of less than 20% should be credited to the Share Investments account.