Exam 15: Specimen Financial Statements: Pepsico, Inc

A decline in the fair value of a trading security is recorded by debiting an unrealized loss account and crediting the Fair Value Adjustment account.

When the cost method is used to account for a stock investment the carrying value of the investment is affected by

Short-term investments should be valued on the balance sheet at

Ultra Cosmetics acquired 10% of the 200,000 shares of common stock of Kardashian Fashion at a total cost of $14 per share on March 18, 2017. On June 30 Kardashian declared and paid a $96,000 dividend. On December 31 Kardashian reported net income of $244,000 for the year. At December 31 the market price of Kardashian Fashion was $16 per share. Instructions Prepare all the necessary entries for 2017 for Ultra Cosmetics.

_______________ debt securities are bought and held primarily for sale in the near term.

If an investor owns less than 20% of the common stock of another corporation as an investment

The ability of an investing company to affect the operating and financial activities of another company, even though the investor holds less than 50% of the stock, is known as

Mega Company receives net proceeds of $73,000 on the sale of stock investments that cost $79,000. This transaction will result in reporting in the income statement a

At the end of an accounting period, if the fair value of the trading debt portfolio is less than its cost, then the company should recognize an ______________ that is reported on the _________________.

On January 1, 2017, the LaRoche Company purchased at face value, a $1,000, 5%, bond that pays interest on January 1. LaRoche Company has a calendar year end. The entry for the receipt of interest on January 1, 2018 is

Some companies attempt to generate investment income through speculative investments.

Mazzeo Company acquires 80 Dodd's 10%, 5 year, $1,000 bonds on January 1, 2017 for $80,000. If Mazzeo sells all of its Dodd's Bonds for $78,900 what gain or loss is recognized?

PWAT Inc. had these transactions pertaining to investments in common stock: Instructions Journalize the transactions.

On January 1, Waverly Company purchased as an investment a $1,000, 7% bond for $1,000. The bond pays interest on January 1. What is the entry to record the interest accrual on December 31?

The account Fair Value Adjustment-Trading appears as a contra account in the income statement.

Hardin Park Company had these transactions pertaining to stock investments Feb. 1 Purchased 5,000 shares of Raley Company (10%) for $89,000 cash. June 1 Received cash dividends of $1 per share on Raley stock. Oct) 1 Sold 2,000 shares of Raley stock for $39,000. Dec) 1 Received cash dividends of $2 per share on Raley stock. The entry to record the sale of the stock would include a

Jambon Company owns 10% interest in the stock of Fanth Corporation. During the year, Fanth pays $12,000 in dividends to Jambon, and reports $200,000 in net income. Jambon Company's investment in Fanth will increase Jambon net income by

If 10% of the common stock of an investee company is purchased as an investment, the appropriate method of accounting for the investment is

Le Tourneau Company had the following transactions pertaining to debt investments. Jan. 1 Purchased 80, 6%, $1,000 Lido Company bonds for $80,000 cash. July 1 Sold 40 Lido Company bonds for $42,400. Instructions Journalize the entries for the purchase and sale of the Lido Company bonds.

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor has _______________ influence over the investee and therefore, the appropriate method of accounting for this type of investment is the _______________ method.