Question 1

When one company owns more than 50% of another company's voting stock and has control over the investee company,the investee is called the ________.

Accepted Answer

The answer of When one company owns more than 50%...

Question 2

On May 15,Tumbleweed,Inc.purchased notes of Dansell Corp.for $80,000.This is considered to be an available-for-sale debt investment.This is the company's first and only investment in available-for-sale debt securities.On Tumbleweed's September 30 year-end,the notes had a fair value of $85,000.The $5,000 difference in fair value must be reported on Tumbleweed's income statement as a $5,000 unrealized gain.

Accepted Answer

A) True 
 B)False

Question 3

Pravis Corporation owns 30% of Kuster Corporation.Pravis Corporation received $9,000 in cash dividends from Kuster Corporation.The entry to record receipt of these dividends is:

Accepted Answer

A)  Debit Cash,$9,000; credit Equity Method Investments,$9,000.
B)  Debt Equity Method Investment,$9,000; credit Cash,$9000.
C)  Debit Cash,$9,000; credit Interest Revenue,$9,000.
D)  Debit Unrealized Gain-Income,$9,000; credit Cash,$9,000.
E)  Debit Cash,$9,000; credit Dividend Revenue,$9,000.F) B) and E)
G) None of the above

Question 4

Zhang Corp.owns 40% of Magnor Company's common stock.Magnor pays $97,000 in total cash dividends to its shareholders.Zhang's entry to record the cash dividend received from Magnor would include a:

Accepted Answer

A)  Debit to Dividends for $97,000.
B)  Debit to Dividends for $38,800.
C)  Debit to Equity Method Investments for $97,000.
D)  Credit to Equity Method Investments for $38,800.
E)  Credit to Cash for $97,000.F) A) and E)
G) A) and B)

Question 5

The consolidation method is used to account for long-term investments in equity securities with controlling influence.

Accepted Answer

A) True 
 B)False

Question 6

Trading debt securities are reported as long-term assets.

Accepted Answer

A) True 
 B)False

Question 7

Segmental Manufacturing owns 35% of Glesson Corp stock.Glesson pays a total of $47,000 in cash dividends for the period.Segmental's entry to record the cash dividend received from Glesson would include a:

Accepted Answer

A)  Credit to Equity Method Investments for $16,450.
B)  Debit to Equity Method Investments for $16,450.
C)  Debit to Cash for $47,000.
D)  Credit to Cash for $16,450.
E)  Credit to Investment Revenue for $47,000.F) A) and E)
G) A) and D)

Question 8

All companies desire a low return on total assets.

Accepted Answer

A) True 
 B)False

Question 9

The investee company in a long term investment with controlling interest is called the:

Accepted Answer

A)  Owner.
B)  Subsidiary.
C)  Parent.
D)  Creditor.
E)  Senior entity.F) B) and C)
G) D) and E)

Question 10

Marshall Company sold supplies in the amount of €25,000 (euros) to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

Accepted Answer

A)  gain of $9,750.
B)  gain of $20,500.
C)  loss of $9,750.
D)  loss of $20,500.
E)  neither a gain nor loss.F) A) and B)
G) B) and E)

Question 11

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

Accepted Answer

When a selling company makes a credit sa...

Question 12

All of the following statements regarding accounting for trading debt securities under U.S.GAAP are true except:

Accepted Answer

A)  The entire portfolio of trading securities is reported at fair value.
B)  An unrealized gain or loss from a change in fair value is reported in the income statement.
C)  A realized gain or loss is recorded when the securities are sold and reported in the income statement.
D)  When the period-end fair value adjustment for the portfolio of trading securities is computed,it includes the cost and fair value of any securities sold.
E)  Any prior period fair value adjustment to the portfolio is not used to compute the gain or loss from sale of individual transactions.F) A) and B)
G) C) and D)

Question 13

When using the equity method,receipt of cash dividends increases the book value of an investment in equity securities.

Accepted Answer

A) True 
 B)False

Question 14

Foreign exchange rates fluctuate due to changing ________ and ________ conditions.

Accepted Answer

economic; political
...

Question 15

Multinational corporations can be U.S.companies with operations in other countries.

Accepted Answer

A) True 
 B)False

Question 16

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Accepted Answer

A)  5.71%
B)  8.66%
C)  12.34%
D)  13.61%
E)  19.32%F) A) and B)
G) D) and E)

Question 17

At acquisition,debt securities are:

Accepted Answer

A)  Recorded at their cost,plus total interest that will be received over the life of the security.
B)  Recorded at the amount of interest that will be received over the life of the security.
C)  Recorded at cost.
D)  Not recorded,because no interest is due yet.
E)  Recorded at cost plus the amount of dividend income to be received.F) A) and E)
G) B) and E)

Question 18

To prepare consolidated financial statements when a U.S.parent company has an international subsidiary,the international subsidiary's financial statements must be translated into U.S.dollars.

Accepted Answer

A) True 
 B)False

Question 19

On February 15,Jewel Company buys bonds of Marcelo Corp.for $200,110 cash.This debt investment is classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.Jewel Company sells 40% of the Marcelo Corp.debt investment on November 17 of the current year for $102,200 cash.The entry to record this sale includes a:

Accepted Answer

A)  Debit to Cash for $80,044.
B)  Credit to Debt Investments-AFS for $80,044.
C)  Debit to Loss on Sale of Debt Investments for $22,156.
D)  Debit to Debt Investments-AFS for $80,044.
E)  Credit to Loss on Sale of Debt Investments for $22,156.F) B) and C)
G) A) and E)

Question 20

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds,at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for these securities are true except:

Accepted Answer

A)  The debt securities should be recorded at cost,$300,000.
B)  The securities will have a maturity value of $300,000.
C)  The semiannual interest payment amount is $12,000.
D)  The semiannual interest payment amount is $24,000.
E)  Interest Revenue should be credited when interest is earned.F) None of the above
G) A) and C)

Exam 26: Investments

Marshall Company sold supplies in the amount of €25,000 (euros) to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

Correct Answer
verified

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

Correct Answer
verified
When a selling company makes a credit sa...
View Answer

When using the equity method,receipt of cash dividends increases the book value of an investment in equity securities.

Correct Answer
verified

All of the following statements regarding accounting for trading debt securities under U.S.GAAP are true except:

Correct Answer
verified

Foreign exchange rates fluctuate due to changing and conditions.

Correct Answer
verified
economic; political
...
View Answer

Zhang Corp.owns 40% of Magnor Company's common stock.Magnor pays $97,000 in total cash dividends to its shareholders.Zhang's entry to record the cash dividend received from Magnor would include a:

Correct Answer
verified

The investee company in a long term investment with controlling interest is called the:

Correct Answer
verified

Pravis Corporation owns 30% of Kuster Corporation.Pravis Corporation received $9,000 in cash dividends from Kuster Corporation.The entry to record receipt of these dividends is:

Correct Answer
verified

The consolidation method is used to account for long-term investments in equity securities with controlling influence.

Correct Answer
verified

All companies desire a low return on total assets.

Correct Answer
verified

Segmental Manufacturing owns 35% of Glesson Corp stock.Glesson pays a total of $47,000 in cash dividends for the period.Segmental's entry to record the cash dividend received from Glesson would include a:

Correct Answer
verified

Multinational corporations can be U.S.companies with operations in other countries.

Correct Answer
verified

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Correct Answer
verified

When one company owns more than 50% of another company's voting stock and has control over the investee company,the investee is called the ________.

Correct Answer
verified

To prepare consolidated financial statements when a U.S.parent company has an international subsidiary,the international subsidiary's financial statements must be translated into U.S.dollars.

Correct Answer
verified

Trading debt securities are reported as long-term assets.

Correct Answer
verified

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds,at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for these securities are true except:

Correct Answer
verified

Correct Answer
verified

At acquisition,debt securities are:

Correct Answer
verified

Correct Answer
verified

Exam 26: Investments

Marshall Company sold supplies in the amount of €25,000 (euros) to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

Correct AnswerverifiedShow Answer

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

Correct AnswerverifiedWhen a selling company makes a credit sa...View AnswerShow Answer

When using the equity method,receipt of cash dividends increases the book value of an investment in equity securities.

Correct AnswerverifiedShow Answer

All of the following statements regarding accounting for trading debt securities under U.S.GAAP are true except:

Correct AnswerverifiedShow Answer

Foreign exchange rates fluctuate due to changing ________ and ________ conditions.

Correct Answerverifiedeconomic; political...View AnswerShow Answer

Zhang Corp.owns 40% of Magnor Company's common stock.Magnor pays $97,000 in total cash dividends to its shareholders.Zhang's entry to record the cash dividend received from Magnor would include a:

Correct AnswerverifiedShow Answer

The investee company in a long term investment with controlling interest is called the:

Correct AnswerverifiedShow Answer

Pravis Corporation owns 30% of Kuster Corporation.Pravis Corporation received $9,000 in cash dividends from Kuster Corporation.The entry to record receipt of these dividends is:

Correct AnswerverifiedShow Answer

The consolidation method is used to account for long-term investments in equity securities with controlling influence.

Correct AnswerverifiedShow Answer

All companies desire a low return on total assets.

Correct AnswerverifiedShow Answer

Segmental Manufacturing owns 35% of Glesson Corp stock.Glesson pays a total of $47,000 in cash dividends for the period.Segmental's entry to record the cash dividend received from Glesson would include a:

Correct AnswerverifiedShow Answer

Multinational corporations can be U.S.companies with operations in other countries.

Correct AnswerverifiedShow Answer

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Correct AnswerverifiedShow Answer

When one company owns more than 50% of another company's voting stock and has control over the investee company,the investee is called the ________.

Correct AnswerverifiedShow Answer

To prepare consolidated financial statements when a U.S.parent company has an international subsidiary,the international subsidiary's financial statements must be translated into U.S.dollars.

Correct AnswerverifiedShow Answer

Trading debt securities are reported as long-term assets.

Correct AnswerverifiedShow Answer

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds,at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for these securities are true except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At acquisition,debt securities are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
When a selling company makes a credit sa...
View Answer

Correct Answer
verified

Correct Answer
verified

Foreign exchange rates fluctuate due to changing and conditions.

Correct Answer
verified
economic; political
...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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