Question 1

Under both IFRS and ASPE, the investor must use the effective-interest method to amortize bond premium or discount.

Accepted Answer

A) True 
 B)False

Question 2

At acquisition, the investment account is debited for the cost of the shares under both the cost and equity methods of accounting for strategic investments.

Accepted Answer

A) True 
 B)False

Question 3

Only debt investments can be purchased as strategic investments.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) the profit of the investee. 
B) dividend distributions of the investee. 
C) both the profit and the dividend distributions of the investee. 
D) neither the profit nor the dividend distributions of the investee. 
A) the profit of the investee. 
B) dividend distributions of the investee. 
C) both the profit and the dividend distributions of the investee. 
D) neither the profit nor the dividend distributions of the investee.

Question 5

Interest revenue is calculated by multiplying the carrying amount of the bond investment by the market rate of interest when the bond was purchased prorated by the portion of the payment period covered during the year.

Accepted Answer

A) True 
 B)False

Question 6

When a company controls the common shares of another company

Accepted Answer

A) affiliated financial statements are prepared. 
B) consolidated financial statements are prepared. 
C) controlling financial statements are prepared. 
D) no financial statements are prepared. 
A) affiliated financial statements are prepared. 
B) consolidated financial statements are prepared. 
C) controlling financial statements are prepared. 
D) no financial statements are prepared.

Question 7

If the fair value through other comprehensive income model is used, then unrealized gains and losses are not used to evaluate management.

Accepted Answer

A) True 
 B)False

Question 8

If 30% of the common shares of an investee are purchased as a long-term investment, the appropriate classification for this investment is most likely

Accepted Answer

A) trading investments. 
B) available-for-sale investments. 
C) non-strategic investments. 
D) investment in associates. 
A) trading investments. 
B) available-for-sale investments. 
C) non-strategic investments. 
D) investment in associates.

Question 9

When investing excess cash for short periods, investors generally invest in debt securities that have both high liquidity and high risk.

Accepted Answer

A) True 
 B)False

Question 10

Under the equity method, the Investment in Associates account is increased when the

Accepted Answer

A) associate reports profits. 
B) associate pays a dividend. 
C) associate reports a loss. 
D) investment is sold at a gain. 
A) associate reports profits. 
B) associate pays a dividend. 
C) associate reports a loss. 
D) investment is sold at a gain.

Question 11

Jaleem Corporation buys 1,000 shares of Samuel Ltd.'s common shares as a trading investment. The shares are purchased for $30 a share. At year-end the shares are trading at $32. The adjusting entry at year-end is

Accepted Answer

The answer of Jaleem Corporation buys 1,000 shares of Samuel...

Question 12

Using the fair value model, both unrealized and realized gains and losses would be reported in the income statement.

Accepted Answer

A) True 
 B)False

Under both IFRS and ASPE, the investor must use the effective-interest method to amortize bond premium or discount.

At acquisition, the investment account is debited for the cost of the shares under both the cost and equity methods of accounting for strategic investments.

Only debt investments can be purchased as strategic investments.

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

Interest revenue is calculated by multiplying the carrying amount of the bond investment by the market rate of interest when the bond was purchased prorated by the portion of the payment period covered during the year.

When a company controls the common shares of another company

If the fair value through other comprehensive income model is used, then unrealized gains and losses are not used to evaluate management.

If 30% of the common shares of an investee are purchased as a long-term investment, the appropriate classification for this investment is most likely

When investing excess cash for short periods, investors generally invest in debt securities that have both high liquidity and high risk.

Under the equity method, the Investment in Associates account is increased when the

Jaleem Corporation buys 1,000 shares of Samuel Ltd.'s common shares as a trading investment. The shares are purchased for $30 a share. At year-end the shares are trading at $32. The adjusting entry at year-end is

Using the fair value model, both unrealized and realized gains and losses would be reported in the income statement.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Statement of Cash Flows

Performance Measurement

Filters

Exam 12: Reporting and Analyzing Investments

Under both IFRS and ASPE, the investor must use the effective-interest method to amortize bond premium or discount.

At acquisition, the investment account is debited for the cost of the shares under both the cost and equity methods of accounting for strategic investments.

Only debt investments can be purchased as strategic investments.

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

Interest revenue is calculated by multiplying the carrying amount of the bond investment by the market rate of interest when the bond was purchased prorated by the portion of the payment period covered during the year.

When a company controls the common shares of another company

If the fair value through other comprehensive income model is used, then unrealized gains and losses are not used to evaluate management.

If 30% of the common shares of an investee are purchased as a long-term investment, the appropriate classification for this investment is most likely

When investing excess cash for short periods, investors generally invest in debt securities that have both high liquidity and high risk.

Under the equity method, the Investment in Associates account is increased when the

Jaleem Corporation buys 1,000 shares of Samuel Ltd.'s common shares as a trading investment. The shares are purchased for $30 a share. At year-end the shares are trading at $32. The adjusting entry at year-end is

Using the fair value model, both unrealized and realized gains and losses would be reported in the income statement.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Statement of Cash Flows

Performance Measurement

Filters