Question 1

Under the equity method of accounting for investments in common shares, when a dividend is received from the investee,

Accepted Answer

A) the Dividend Income account is credited. 
B) the Investment account is increased. 
C) the Investment account is decreased. 
D) no entry is necessary. 
A) the Dividend Income account is credited. 
B) the Investment account is increased. 
C) the Investment account is decreased. 
D) no entry is necessary.

Question 2

"Other comprehensive income" does not include

Accepted Answer

A) revaluations of property, plant and equipment. 
B) certain translation gains and losses on foreign currency. 
C) realized gains and losses on trading investments. 
D) unrealized gains and losses for trading investments. 
A) revaluations of property, plant and equipment. 
B) certain translation gains and losses on foreign currency. 
C) realized gains and losses on trading investments. 
D) unrealized gains and losses for trading investments.

Question 3

On September 15, 2022, Alonso Ltd.sells 150 common shares of Bandi Corp., which were being held as a trading investment.The shares were acquired six months ago at $75 a share.Alonso sells the shares for $60 a share.The entry to record the sale is

Accepted Answer

The answer of On September 15, 2022, Alonso Ltd.sells 150...

Question 4

At acquisition, non-strategic investments are recorded at purchase cost.

Accepted Answer

A) True 
 B)False

Question 5

When an investee can be significantly influenced, it is known as a(n)

Accepted Answer

A) subsidiary. 
B) associate. 
C) trading investment. 
D) parent. 
A) subsidiary. 
B) associate. 
C) trading investment. 
D) parent.

Question 6

No unrealized gains and losses are recorded when using the amortized cost model.

Accepted Answer

A) True 
 B)False

Question 7

The ability of an investor to affect the operating and financial activities of another company, even though the investor does not control the company, is known as

Accepted Answer

A) significant influence. 
B) control. 
C) a combination. 
D) influence and control. 
A) significant influence. 
B) control. 
C) a combination. 
D) influence and control.

Question 8

The degree of influence determines how a strategic investment is classified.

Accepted Answer

A) True 
 B)False

Question 9

Laski Corp.holds two trading investments and has decided to use the fair value through profit or loss model.At year end, one has an unrealized gain of $2,000 and the other has an unrealized loss of $4,500.The trading investments would be reported at fair value and Laski Corp.would report a net unrealized loss of

Accepted Answer

A) $2,500 in the statement of income. 
B) $4,500 in the statement of income. 
C) $2,500 in the statement of comprehensive income. 
D) $4,500 in the statement of comprehensive income. 
A) $2,500 in the statement of income. 
B) $4,500 in the statement of income. 
C) $2,500 in the statement of comprehensive income. 
D) $4,500 in the statement of comprehensive income.

Question 10

Unless there is evidence to the contrary, an investor owning at least 20% of the shares of an investee is assumed to have significant influence.

Accepted Answer

A) True 
 B)False

Question 11

If there is a bond premium on a long-term bond investment, the carrying amount of the investment is reduced by the amount of the amortization.

Accepted Answer

A) True 
 B)False

Question 12

An advantage of using the fair value through other comprehensive income is that

Accepted Answer

A) the effect on other comprehensive income is reported in the statement of income. 
B) unrealized gains and losses are not used to evaluate management. 
C) unrealized losses must be reported on the statement of income, but unrealized gains are reported in other comprehensive income. 
D) unrealized gains must be reported on the statement of income, but unrealized losses are reported in other comprehensive income. 
A) the effect on other comprehensive income is reported in the statement of income. 
B) unrealized gains and losses are not used to evaluate management. 
C) unrealized losses must be reported on the statement of income, but unrealized gains are reported in other comprehensive income. 
D) unrealized gains must be reported on the statement of income, but unrealized losses are reported in other comprehensive income.

Question 13

All the following investments are generally shown at fair value except

Accepted Answer

A) short-term debt investments. 
B) trading investments. 
C) bond investments intended to be held to maturity. 
D) shares purchased with the intention of achieving a capital gain on sale. 
A) short-term debt investments. 
B) trading investments. 
C) bond investments intended to be held to maturity. 
D) shares purchased with the intention of achieving a capital gain on sale.

Question 14

Short-term investments in bonds are accounted for using the fair value through profit or loss model.

Accepted Answer

A) True 
 B)False

Question 15

Other comprehensive income (loss)

Accepted Answer

A) has no impact on shareholders' equity. 
B) increases (decreases)accumulated other comprehensive income. 
C) increases (decreases)retained earnings. 
D) increases (decreases)net income. 
A) has no impact on shareholders' equity. 
B) increases (decreases)accumulated other comprehensive income. 
C) increases (decreases)retained earnings. 
D) increases (decreases)net income.

Question 16

Non-strategic investments that are held for the purpose of earning capital gains are called Trading Investments.

Accepted Answer

A) True 
 B)False

Question 17

Dividends received on investments are accounted for in the same way under the fair value through profit or loss model cost and the equity method.

Accepted Answer

A) True 
 B)False

Question 18

If an investment in an associate is sold at a gain, the gain

Accepted Answer

A) is reported as operating income. 
B) is reported under a special section, "Discontinued Investments," on the statement of income. 
C) is reported in the Other Income and Gains section on the statement of income. 
D) contributes to gross profit on the statement of income. 
A) is reported as operating income. 
B) is reported under a special section, "Discontinued Investments," on the statement of income. 
C) is reported in the Other Income and Gains section on the statement of income. 
D) contributes to gross profit on the statement of income.

Question 19

When investing excess cash for short periods of time,

Accepted Answer

A) corporations generally invest in equity securities. 
B) corporations generally invest in debt securities that have both high liquidity and high risk. 
C) corporations generally invest in debt securities that have high risk and low liquidity. 
D) corporations generally invest in debt securities that have low risk and high liquidity. 
A) corporations generally invest in equity securities. 
B) corporations generally invest in debt securities that have both high liquidity and high risk. 
C) corporations generally invest in debt securities that have high risk and low liquidity. 
D) corporations generally invest in debt securities that have low risk and high liquidity.

Question 20

Hankers Corporation buys 1,500 shares of Viggo Ltd.'s common shares as a trading investment.The shares are purchased for $45 a share.At year end the shares are trading at $48.The adjusting entry at year end is .

Accepted Answer

The answer of Hankers Corporation buys 1,500 shares of Viggo...

Under the equity method of accounting for investments in common shares, when a dividend is received from the investee,

"Other comprehensive income" does not include

On September 15, 2022, Alonso Ltd.sells 150 common shares of Bandi Corp., which were being held as a trading investment.The shares were acquired six months ago at $75 a share.Alonso sells the shares for $60 a share.The entry to record the sale is

At acquisition, non-strategic investments are recorded at purchase cost.

When an investee can be significantly influenced, it is known as a(n)

No unrealized gains and losses are recorded when using the amortized cost model.

The ability of an investor to affect the operating and financial activities of another company, even though the investor does not control the company, is known as

The degree of influence determines how a strategic investment is classified.

Unless there is evidence to the contrary, an investor owning at least 20% of the shares of an investee is assumed to have significant influence.

If there is a bond premium on a long-term bond investment, the carrying amount of the investment is reduced by the amount of the amortization.

An advantage of using the fair value through other comprehensive income is that

All the following investments are generally shown at fair value except

Short-term investments in bonds are accounted for using the fair value through profit or loss model.

Other comprehensive income (loss)

Non-strategic investments that are held for the purpose of earning capital gains are called Trading Investments.

Dividends received on investments are accounted for in the same way under the fair value through profit or loss model cost and the equity method.

If an investment in an associate is sold at a gain, the gain

When investing excess cash for short periods of time,

Hankers Corporation buys 1,500 shares of Viggo Ltd.'s common shares as a trading investment.The shares are purchased for $45 a share.At year end the shares are trading at $48.The adjusting entry at year end is .

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

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Exam 12: Reporting and Analyzing Investments

Under the equity method of accounting for investments in common shares, when a dividend is received from the investee,

"Other comprehensive income" does not include

On September 15, 2022, Alonso Ltd.sells 150 common shares of Bandi Corp., which were being held as a trading investment.The shares were acquired six months ago at $75 a share.Alonso sells the shares for $60 a share.The entry to record the sale is

At acquisition, non-strategic investments are recorded at purchase cost.

When an investee can be significantly influenced, it is known as a(n)

No unrealized gains and losses are recorded when using the amortized cost model.

The ability of an investor to affect the operating and financial activities of another company, even though the investor does not control the company, is known as

The degree of influence determines how a strategic investment is classified.

Unless there is evidence to the contrary, an investor owning at least 20% of the shares of an investee is assumed to have significant influence.

If there is a bond premium on a long-term bond investment, the carrying amount of the investment is reduced by the amount of the amortization.

An advantage of using the fair value through other comprehensive income is that

All the following investments are generally shown at fair value except

Short-term investments in bonds are accounted for using the fair value through profit or loss model.

Other comprehensive income (loss)

Non-strategic investments that are held for the purpose of earning capital gains are called Trading Investments.

Dividends received on investments are accounted for in the same way under the fair value through profit or loss model cost and the equity method.

If an investment in an associate is sold at a gain, the gain

When investing excess cash for short periods of time,

Hankers Corporation buys 1,500 shares of Viggo Ltd.'s common shares as a trading investment.The shares are purchased for $45 a share.At year end the shares are trading at $48.The adjusting entry at year end is .

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