Question 1

Purchased $400,000 of ABC Co.5% bonds at 100 plus accrued interest of $4,500.Sold $250,000 of bonds at 97.The journal entry for the purchase would include:

Accepted Answer

A)  a credit to Interest Receivable for $4,500
B)  a credit to Interest Revenue for $4,500
C)  a debit to Interest Receivable for $4,500
D)  a debit to Interest Revenue for $4,500E) A) and C)
F) B) and C)

Question 2

The account Unrealized Gain (Loss) on Trading Securities should be included in the

Accepted Answer

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 EarningsE) A) and C)
F) A) and B)

Question 3

When the cost method is used to account for an investment,the carrying value of the investment is affected by

Accepted Answer

A)  the dividend distributions of the investee.
B)  the periodic net income of the investee.
C)  the earnings and dividend distributions of the investee.
D)  neither the earnings nor the dividends of the investee.E) B) and C)
F) C) and D)

Question 4

In general,consolidated financial statements should be prepared

Accepted Answer

A)  when a corporation owns more than 20% and less than 40% of the common stock of another company
B)  when a corporation owns more than 50% of the common stock of another company
C)  only when a corporation owns 100% of the common stock of another company
D)  whenever the market value of the stock investment is significantly lower than its costE) A) and B)
F) B) and D)

Question 5

Comprehensive income does not affect net income or retained earnings.

Accepted Answer

A) True 
 B)False

Question 6

The equity method of accounting for investments

Accepted Answer

A)  requires a year-end adjustment to revalue the stock to lower of cost or market
B)  requires the investment to be reported at its original cost
C)  requires the investment be increased by the reported net income of the investee
D)  requires the investment be increased by the dividends paid by the investeeE) B) and C)
F) C) and D)

Question 7

If the bonds are purchased between interest dates,the purchase price includes accrued interest since the last interest payment.

Accepted Answer

A) True 
 B)False

Question 8

Interest revenue on bonds is reported

Accepted Answer

A)  as an addition to the Investment in Bonds account
B)  as part of Comprehensive Income but not as part of Net Income.
C)  as part of other income
D)  as part of operating incomeE) A) and C)
F) None of the above

Question 9

The account Unrealized Gain (Loss) on Available-For-Sale Securities should be included in the

Accepted Answer

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 EarningsE) A) and B)
F) B) and D)

Question 10

Following is data for the available-for-sale securities held by AdBrand Company as of December 31,2012.
  
Required:
(1)Complete the table above to find the total cost and fair value for the company's available-for-sale securities portfolio.
(2)Calculate and record the required December 31,2012 adjustment.
(3)Explain how the adjustment from step (2)is reported on AdBrand's 2012 financial statements.

Accepted Answer

(3)The unrealized loss will be shown a...

Question 11

Growth firms generally pay regular dividends to stockholders.

Accepted Answer

A) True 
 B)False

Question 12

Prepare the journal entries for the following transactions for Batson Co.

Accepted Answer

(a)<br> <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> (b)<br>...

Question 13

Newville Corporation reported net income of $50,000 in 2015.They have 10,000 shares of $100 par,6% preferred stock and 50,000 shares of $2 common stock outstanding.During 2012 Newville paid the preferred stockholder's a $6 per share dividend and also paid $30,000 to common shareholders.The market value of Newville's stock is: Preferred - $105 and Common - $10.
(1)Calculate Newville's dividend yield.
(2)Why does the dividend yield vary widely across firms?

Accepted Answer

(1)Dividend yield = $0.60 ** / $10.00 = ...

Question 14

Yankton Company began the year without an investment portfolio.During the year they purchased investments classified as available-for-sale securities at a cost of $13,000.At the end of the year,the market value of the securities was $11,000.The Yankton Company's financial statements for the current year should show

Accepted Answer

A)  a loss of $2,000 on the income statement and available-for-sale securities of $13,000 on the balance sheet
B)  no loss on the income statement and available-for-sale securities of $13,000 on the balance sheet
C)  no loss on the income statement,available-for-sale securities of $11,000 and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheet
D)  a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheetE) A) and B)
F) B) and D)

Question 15

Journalize the entries to record the following selected transactions of Oliver Co.:

Accepted Answer

The answer of Journalize the entries to record the following...

Question 16

Temporary investments are recorded at their cost which would include broker's commissions.

Accepted Answer

A) True 
 B)False

Question 17

Jarvis Corporation makes an investment in 100 shares of Saxton Company's common stock.The stock is purchased for $45 a share plus brokerage fees of $280.The entry for the purchase is:

Accepted Answer

A)  Cash 4,500 Stock Investments - Saxton Company 4,500
B)  Stock Investments - Saxton Company 4,780 Cash 4,780
C)  Stock Investments - Saxton Company 4,500 Brokerage Fee Expense 280Cash 4,780
D)  Stock Investments - Saxton Company 4,500 Cash 4,500E) All of the above
F) A) and C)

Question 18

The cost method of accounting for stock

Accepted Answer

A)  recognizes dividends as income
B)  is only appropriate as part of a consolidation
C)  requires the investment be increased by the reported net income of the investee
D)  requires the investment be decreased by the reported net income of the investeeE) B) and D)
F) B) and C)

Question 19

The amortization of discounts or premiums are recorded as part of interest income on the income statement.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a part of comprehensive income?

Accepted Answer

A)  foreign currency items
B)  cash flows from stock investments
C)  unrealized gains and losses
D)  pension liability adjustmentsE) B) and C)
F) A) and D)

Exam 13: Investments and Fair Value Accounting

Correct Answer
verified
(3)The unrealized loss will be shown a...
View Answer

Temporary investments are recorded at their cost which would include broker's commissions.

Correct Answer
verified

The amortization of discounts or premiums are recorded as part of interest income on the income statement.

Correct Answer
verified

Growth firms generally pay regular dividends to stockholders.

Correct Answer
verified

In general,consolidated financial statements should be prepared

Correct Answer
verified

The account Unrealized Gain (Loss) on Trading Securities should be included in the

Correct Answer
verified

When the cost method is used to account for an investment,the carrying value of the investment is affected by

Correct Answer
verified

Purchased $400,000 of ABC Co.5% bonds at 100 plus accrued interest of $4,500.Sold $250,000 of bonds at 97.The journal entry for the purchase would include:

Correct Answer
verified

Correct Answer
verified

Interest revenue on bonds is reported

Correct Answer
verified

Prepare the journal entries for the following transactions for Batson Co.

Correct Answer
verified
(a)
(b)
...
View Answer

The cost method of accounting for stock

Correct Answer
verified

Comprehensive income does not affect net income or retained earnings.

Correct Answer
verified

Journalize the entries to record the following selected transactions of Oliver Co.:

Correct Answer
verified

If the bonds are purchased between interest dates,the purchase price includes accrued interest since the last interest payment.

Correct Answer
verified

The equity method of accounting for investments

Correct Answer
verified

Jarvis Corporation makes an investment in 100 shares of Saxton Company's common stock.The stock is purchased for $45 a share plus brokerage fees of $280.The entry for the purchase is:

Correct Answer
verified

Correct Answer
verified
(1)Dividend yield = $0.60 ** / $10.00 = ...
View Answer

Which of the following is not a part of comprehensive income?

Correct Answer
verified

The account Unrealized Gain (Loss) on Available-For-Sale Securities should be included in the

Correct Answer
verified

Exam 13: Investments and Fair Value Accounting

Correct Answerverified (3)The unrealized loss will be shown a...View AnswerShow Answer

Temporary investments are recorded at their cost which would include broker's commissions.

Correct AnswerverifiedShow Answer

The amortization of discounts or premiums are recorded as part of interest income on the income statement.

Correct AnswerverifiedShow Answer

Growth firms generally pay regular dividends to stockholders.

Correct AnswerverifiedShow Answer

In general,consolidated financial statements should be prepared

Correct AnswerverifiedShow Answer

The account Unrealized Gain (Loss) on Trading Securities should be included in the

Correct AnswerverifiedShow Answer

When the cost method is used to account for an investment,the carrying value of the investment is affected by

Correct AnswerverifiedShow Answer

Purchased $400,000 of ABC Co.5% bonds at 100 plus accrued interest of $4,500.Sold $250,000 of bonds at 97.The journal entry for the purchase would include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Interest revenue on bonds is reported

Correct AnswerverifiedShow Answer

Prepare the journal entries for the following transactions for Batson Co.

Correct Answerverified(a) (b)...View AnswerShow Answer

The cost method of accounting for stock

Correct AnswerverifiedShow Answer

Comprehensive income does not affect net income or retained earnings.

Correct AnswerverifiedShow Answer

Journalize the entries to record the following selected transactions of Oliver Co.:

Correct AnswerverifiedShow Answer

If the bonds are purchased between interest dates,the purchase price includes accrued interest since the last interest payment.

Correct AnswerverifiedShow Answer

The equity method of accounting for investments

Correct AnswerverifiedShow Answer

Jarvis Corporation makes an investment in 100 shares of Saxton Company's common stock.The stock is purchased for $45 a share plus brokerage fees of $280.The entry for the purchase is:

Correct AnswerverifiedShow Answer

Correct Answerverified(1)Dividend yield = $0.60 ** / $10.00 = ...View AnswerShow Answer

Which of the following is not a part of comprehensive income?

Correct AnswerverifiedShow Answer

The account Unrealized Gain (Loss) on Available-For-Sale Securities should be included in the

Correct AnswerverifiedShow Answer

Correct Answer
verified
(3)The unrealized loss will be shown a...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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(a)
(b)
...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
(1)Dividend yield = $0.60 ** / $10.00 = ...
View Answer

Correct Answer
verified

Correct Answer
verified