Question 1

Under both the fair value model and the amortized cost model, investments are adjusted upwards or downwards to reflect their fair value at year end.

Accepted Answer

A) True 
 B)False

Question 2

Trading Investments are listed on the statement of financial position immediately below

Accepted Answer

A) cash. 
B) inventory. 
C) accounts receivable. 
D) prepaid expenses. 
A) cash. 
B) inventory. 
C) accounts receivable. 
D) prepaid expenses.

Question 3

Use the following information for questions 
On January 1, 2021, Soo Park Corp.purchased at face value, a $5,000, 5%, bond investment that pays interest on January 1 and July 1.Soo Park classified the investment as long-term.Soo Park has a calendar year end.
-The entry for the receipt of interest on January 1, 2022 is

Accepted Answer

The answer of Use the following information for questions 
On...

Question 4

If a trading investment in bonds is sold one month after its value was adjusted at year end, the investment account is

Accepted Answer

A) debited for the carrying amount of the bonds at the sale date. 
B) credited for the cost of the bonds at the sale date. 
C) credited for the carrying amount of the bonds at the sale date. 
D) debited for the cost of the bonds at the sale date. 
A) debited for the carrying amount of the bonds at the sale date. 
B) credited for the cost of the bonds at the sale date. 
C) credited for the carrying amount of the bonds at the sale date. 
D) debited for the cost of the bonds at the sale date.

Question 5

When an investment in bonds is made, the investment account is debited for the face value of the bond less any premium or plus any discount.

Accepted Answer

A) True 
 B)False

Question 6

During its first year of operation, Snapper Limited (a public company) acquired three securities as trading investments.Investment A cost $75,000 and had a year-end fair value of $80,000.Investment B cost $42,000 and had a year-end fair value of $26,000.Investment C cost $32,000 and had a year-end fair value of $30,000.What amount should be reported as an unrealized loss in Snapper's statement of income for the first year of operation?

Accepted Answer

A) $0 
B) $13,000 
C) $18,000 
D) $23,000 
A) $0 
B) $13,000 
C) $18,000 
D) $23,000

Question 7

Amortization of bond discounts for bond investments will

Accepted Answer

A) increase Interest Income and increase the Investment account. 
B) increase Interest Income and decrease the Investment account. 
C) decrease Interest Income and decrease the Investment account. 
D) decrease Interest Income and increase the Investment account. 
A) increase Interest Income and increase the Investment account. 
B) increase Interest Income and decrease the Investment account. 
C) decrease Interest Income and decrease the Investment account. 
D) decrease Interest Income and increase the Investment account.

Question 8

Using the fair value through profit or loss model, both unrealized and realized gains and losses would be reported in the statement of income.

Accepted Answer

A) True 
 B)False

Question 9

Use the following information for questions 
On January 1, 2022, Warner Inc.purchased 3.5%, $50,000 face value Jackson Corp.bonds at face value.Interest is payable semi-annually on July 1 and January 1.The bonds are classified as trading investments.The bonds were sold on July 2, 2022 for $53,000.
-Warner's entry to record the receipt of the July 1 interest payment would include a

Accepted Answer

A) debit to Interest Expense for $875. 
B) credit to Interest Income for $875. 
C) credit to Interest Income for $1,750. 
D) credit to Trading Investments for $875. 
A) debit to Interest Expense for $875. 
B) credit to Interest Income for $875. 
C) credit to Interest Income for $1,750. 
D) credit to Trading Investments for $875.

Question 10

Information flows among financial statements in this order:

Accepted Answer

A) statement of financial position to statement of changes in equity to statement of comprehensive income to statement of income. 
B) statement of income to statement of changes in equity to statement of comprehensive income to statement of financial position. 
C) statement of income to statement of comprehensive income to statement of changes in equity to statement of financial position. 
D) statement of changes in equity to statement of financial position to statement of comprehensive income to statement of income. 
A) statement of financial position to statement of changes in equity to statement of comprehensive income to statement of income. 
B) statement of income to statement of changes in equity to statement of comprehensive income to statement of financial position. 
C) statement of income to statement of comprehensive income to statement of changes in equity to statement of financial position. 
D) statement of changes in equity to statement of financial position to statement of comprehensive income to statement of income.

Question 11

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

Accepted Answer

A) associate reports net income. 
B) associate reports a net loss. 
C) associate is originally acquired. 
D) both when the investee reports net income and when the investment is originally acquired. 
A) associate reports net income. 
B) associate reports a net loss. 
C) associate is originally acquired. 
D) both when the investee reports net income and when the investment is originally acquired.

Question 12

Which of the following is the correct match concerning the appropriate accounting for strategic investments?

Accepted Answer

The answer of Which of the following is the correct...

Question 13

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 14

A company that has the majority of its voting shares owned by a parent company is called the

Accepted Answer

A) controlled company. 
B) subsidiary company. 
C) investee company. 
D) sibling company. 
A) controlled company. 
B) subsidiary company. 
C) investee company. 
D) sibling company.

Question 15

Which of the following is not a model used for valuing non-strategic investments?

Accepted Answer

A) fair value through profit or loss 
B) cost model through other comprehensive income 
C) fair value through other comprehensive income 
D) amortized cost 
A) fair value through profit or loss 
B) cost model through other comprehensive income 
C) fair value through other comprehensive income 
D) amortized cost

Question 16

Investments in associates are reported as current assets on the statement of financial position at fair value.

Accepted Answer

A) True 
 B)False

Question 17

If the equity method is used to account for an investment in common shares

Accepted Answer

A) it is presumed that the investor has no significant influence on the investee. 
B) net income of the investee is ignored by the investor. 
C) net income of the investee is recorded as realized gains, but dividends received are credited to the investment account. 
D) the investment account may be at times greater than the acquisition cost. 
A) it is presumed that the investor has no significant influence on the investee. 
B) net income of the investee is ignored by the investor. 
C) net income of the investee is recorded as realized gains, but dividends received are credited to the investment account. 
D) the investment account may be at times greater than the acquisition cost.

Question 18

Under the equity method of accounting for an investment

Accepted Answer

A) Dividend Income is credited when dividends are received. 
B) an Unrealized Gain account is credited when the investee reports net income. 
C) the Investment account is credited when the investee reports net income. 
D) the Investment account is credited when dividends are received. 
A) Dividend Income is credited when dividends are received. 
B) an Unrealized Gain account is credited when the investee reports net income. 
C) the Investment account is credited when the investee reports net income. 
D) the Investment account is credited when dividends are received.

Question 19

Only debt investments can be accounted for using the fair value through other comprehensive income model.

Accepted Answer

A) True 
 B)False

Question 20

A company that controls the common shares of another company is known as the

Accepted Answer

A) charge company. 
B) subsidiary company. 
C) parent company. 
D) management company. 
A) charge company. 
B) subsidiary company. 
C) parent company. 
D) management company.

Under both the fair value model and the amortized cost model, investments are adjusted upwards or downwards to reflect their fair value at year end.

Trading Investments are listed on the statement of financial position immediately below

If a trading investment in bonds is sold one month after its value was adjusted at year end, the investment account is

When an investment in bonds is made, the investment account is debited for the face value of the bond less any premium or plus any discount.

Amortization of bond discounts for bond investments will

Using the fair value through profit or loss model, both unrealized and realized gains and losses would be reported in the statement of income.

Information flows among financial statements in this order:

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

Which of the following is the correct match concerning the appropriate accounting for strategic investments?

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

A company that has the majority of its voting shares owned by a parent company is called the

Which of the following is not a model used for valuing non-strategic investments?

Investments in associates are reported as current assets on the statement of financial position at fair value.

If the equity method is used to account for an investment in common shares

Under the equity method of accounting for an investment

Only debt investments can be accounted for using the fair value through other comprehensive income model.

A company that controls the common shares of another company is known as the

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 both the fair value model and the amortized cost model, investments are adjusted upwards or downwards to reflect their fair value at year end.

Trading Investments are listed on the statement of financial position immediately below

If a trading investment in bonds is sold one month after its value was adjusted at year end, the investment account is

When an investment in bonds is made, the investment account is debited for the face value of the bond less any premium or plus any discount.

Amortization of bond discounts for bond investments will

Using the fair value through profit or loss model, both unrealized and realized gains and losses would be reported in the statement of income.

Information flows among financial statements in this order:

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

Which of the following is the correct match concerning the appropriate accounting for strategic investments?

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

A company that has the majority of its voting shares owned by a parent company is called the

Which of the following is not a model used for valuing non-strategic investments?

Investments in associates are reported as current assets on the statement of financial position at fair value.

If the equity method is used to account for an investment in common shares

Under the equity method of accounting for an investment

Only debt investments can be accounted for using the fair value through other comprehensive income model.

A company that controls the common shares of another company is known as the

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