Question 1

Debt investments held to earn interest income are reported at amortized cost in the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 2

When investing excess cash for short periods of time, corporations generally invest in debt securities that have

Accepted Answer

A) high risk and low liquidity. 
B) low risk and high liquidity. 
C) high risk and high liquidity. 
D) low risk and low liquidity. 
A) high risk and low liquidity. 
B) low risk and high liquidity. 
C) high risk and high liquidity. 
D) low risk and low liquidity.

Question 3

Debt investments are all of the following except

Accepted Answer

A) low risk. 
B) classified according to maturity. 
C) equity securities. 
D) debt securities. 
A) low risk. 
B) classified according to maturity. 
C) equity securities. 
D) debt securities.

Question 4

Use the following information for questions 
On January 1, 2021, Marianne Corp.purchased $50,000, of Robin Ltd.'s 4%, 10-year bonds for $48,000, since the market interest rate was approximately 4.5%.The bonds pay interest on January 1 and July 1.Marianne has a calendar year end, and classified the bonds as long-term investments.The fair value on December 31, 2021 was $48,500.Marianne sold the bonds on January 2, 2022 for $48,500.
-The entry for the receipt of interest on July 1, 2021 is

Accepted Answer

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

Question 5

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 6

Use the following information to answer questions 
Wells Inc.reported these transactions relating to marketable Trading Investments intended to generate net income and to be sold in the near term:
  
-The entry to record the sale of the shares on Oct 1 would include a

Accepted Answer

A) credit to Trading Investments for $3,800. 
B) credit to Realized Gain for $800. 
C) credit to Unrealized Gain for $800. 
D) debit to Unrealized Gain for $3,800. 
A) credit to Trading Investments for $3,800. 
B) credit to Realized Gain for $800. 
C) credit to Unrealized Gain for $800. 
D) debit to Unrealized Gain for $3,800.

Question 7

Which one of the following would not be classified as a non-strategic investment?

Accepted Answer

A) money-market securities 
B) idle cash in a chequing account 
C) trading investments 
D) long-term bonds 
A) money-market securities 
B) idle cash in a chequing account 
C) trading investments 
D) long-term bonds

Question 8

Short-term investments in bonds are accounted for using the

Accepted Answer

A) equity method. 
B) short-term method. 
C) fair value through profit or loss model. 
D) amortized cost model. 
A) equity method. 
B) short-term method. 
C) fair value through profit or loss model. 
D) amortized cost model.

Question 9

Republic Corp.owns a 15% interest in the common shares of Wholesome Ltd.During this year, Wholesome pays a total of $25,000 in dividends and reports $160,000 net income.Republic's investment in Wholesome will increase Republic's net income by

Accepted Answer

A) $25,000. 
B) $24,000. 
C) $27,750. 
D) $ 3,750. 
A) $25,000. 
B) $24,000. 
C) $27,750. 
D) $ 3,750.

Question 10

On January 1, 2022, Coastal Corp.purchased 30% of the common shares of Mansbridge Corp.for $600,000.During 2022, Mansbridge Corp.reported net income of $75,000 and paid total cash dividends of $15,000.The balance in the Investment in Associates (Mansbridge) account on Coastal's books at December 31, 2022 is

Accepted Answer

A) $675,000. 
B) $622,500. 
C) $618,000. 
D) $600,000. 
A) $675,000. 
B) $622,500. 
C) $618,000. 
D) $600,000.

Question 11

The amortization of a bond investment is recorded in

Accepted Answer

A) an Interest Expense account. 
B) an Interest Income account. 
C) neither an Interest Expense or an Interest Income account. 
D) either an Interest Expense account or an Interest Income account. 
A) an Interest Expense account. 
B) an Interest Income account. 
C) neither an Interest Expense or an Interest Income account. 
D) either an Interest Expense account or an Interest Income account.

Question 12

If the equity method is being used, cash dividends received

Accepted Answer

A) are credited to the Dividend Income account. 
B) do not require an entry because the investee's net income have already been recorded at the proper proportion on the investor's books. 
C) are credited to the Investment in Associates account. 
D) are credited to the Income from Associates account. 
A) are credited to the Dividend Income account. 
B) do not require an entry because the investee's net income have already been recorded at the proper proportion on the investor's books. 
C) are credited to the Investment in Associates account. 
D) are credited to the Income from Associates account.

Question 13

Use the following information for questions 
On January 1, 2021, Marianne Corp.purchased $50,000, of Robin Ltd.'s 4%, 10-year bonds for $48,000, since the market interest rate was approximately 4.5%.The bonds pay interest on January 1 and July 1.Marianne has a calendar year end, and classified the bonds as long-term investments.The fair value on December 31, 2021 was $48,500.Marianne sold the bonds on January 2, 2022 for $48,500.
-The entry for the sale of the bonds on January 2, 2022 is

Accepted Answer

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

Question 14

Consolidated financial statements are appropriate when one company has significant influence over another company.

Accepted Answer

A) True 
 B)False

Question 15

An investor who is using the equity method records dividends declared by the associate by

Accepted Answer

A) crediting the loss from associates account. 
B) crediting the income from associates account. 
C) crediting the dividend income account. 
D) crediting the investment in associates account. 
A) crediting the loss from associates account. 
B) crediting the income from associates account. 
C) crediting the dividend income account. 
D) crediting the investment in associates account.

Question 16

On June 1, 2022, Mango Corp.purchased Papaya Corp.common shares for $12,100 as a trading investment.Three months later, Mango sold these shares for $13,000.The entry to record the sale would include a

Accepted Answer

A) debit to Cash of $12,100. 
B) credit to Interest Income of $900. 
C) credit to Trading Investments of $13,000. 
D) credit to Realized Gain on Trading Investments of $900. 
A) debit to Cash of $12,100. 
B) credit to Interest Income of $900. 
C) credit to Trading Investments of $13,000. 
D) credit to Realized Gain on Trading Investments of $900.

Question 17

Under both IFRS and ASPE, investors can use either the cost model or the equity method for significantly influenced investments.

Accepted Answer

A) True 
 B)False

Debt investments held to earn interest income are reported at amortized cost in the statement of financial position.

When investing excess cash for short periods of time, corporations generally invest in debt securities that have

Debt investments are all of the following except

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

Use the following information to answer questions Wells Inc.reported these transactions relating to marketable Trading Investments intended to generate net income and to be sold in the near term: -The entry to record the sale of the shares on Oct 1 would include a

Which one of the following would not be classified as a non-strategic investment?

Short-term investments in bonds are accounted for using the

Republic Corp.owns a 15% interest in the common shares of Wholesome Ltd.During this year, Wholesome pays a total of $25,000 in dividends and reports $160,000 net income.Republic's investment in Wholesome will increase Republic's net income by

The amortization of a bond investment is recorded in

If the equity method is being used, cash dividends received

Consolidated financial statements are appropriate when one company has significant influence over another company.

An investor who is using the equity method records dividends declared by the associate by

On June 1, 2022, Mango Corp.purchased Papaya Corp.common shares for $12,100 as a trading investment.Three months later, Mango sold these shares for $13,000.The entry to record the sale would include a

Under both IFRS and ASPE, investors can use either the cost model or the equity method for significantly influenced investments.

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

Debt investments held to earn interest income are reported at amortized cost in the statement of financial position.

When investing excess cash for short periods of time, corporations generally invest in debt securities that have

Debt investments are all of the following except

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

Use the following information to answer questions Wells Inc.reported these transactions relating to marketable Trading Investments intended to generate net income and to be sold in the near term: -The entry to record the sale of the shares on Oct 1 would include a

Which one of the following would not be classified as a non-strategic investment?

Short-term investments in bonds are accounted for using the

Republic Corp.owns a 15% interest in the common shares of Wholesome Ltd.During this year, Wholesome pays a total of $25,000 in dividends and reports $160,000 net income.Republic's investment in Wholesome will increase Republic's net income by

The amortization of a bond investment is recorded in

If the equity method is being used, cash dividends received

Consolidated financial statements are appropriate when one company has significant influence over another company.

An investor who is using the equity method records dividends declared by the associate by

On June 1, 2022, Mango Corp.purchased Papaya Corp.common shares for $12,100 as a trading investment.Three months later, Mango sold these shares for $13,000.The entry to record the sale would include a

Under both IFRS and ASPE, investors can use either the cost model or the equity method for significantly influenced investments.

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