Question 1

Account for non-strategic investments.

Accepted Answer

Horizontal analysis is a technique for e

Question 2

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

Question 3

Use the following information for questions.
On January 1, 2017, 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, 2017 was $48,500. Marianne sold the bonds on January 2, 2018 for $48,500.
-The adjusting entry for interest on December 31, 2017, is

Accepted Answer

A)  No entry required 
B)   
C)   
D)   
A)  No entry required 
B)   
C)   
D)

Question 4

On January 1, 2017, as a long-term investment, Samantha Ltd. purchases 2,000 Marvel Corp. common shares for $10 each, which represents 50% of the issued shares. Marvel Corp. is a private company not traded on the stock market. Samantha is also a private company, reporting under ASPE, and chooses to use the cost method to account for the Marvel investment.On July 1, 2017, Marvel pays a total dividend of $38,000.At year end, December 31, 2017, a fair value of the Marvel shares is not available, but Samantha estimates the fair value is $11.50.On November 1, 2018, Samantha sells 40% of its holdings back to Marvel for $12,500.InstructionsPrepare all necessary journal entries relating to this investment on Samantha's books.

Accepted Answer

The answer of On January 1, 2017, as a long-term...

Question 5

Which of the following would never be classified as a long-term investment?

Accepted Answer

A)  strategic investments 
B)  held for trading investments 
C)  investments in associates 
D)  bonds with a ten-year maturity 
A)  strategic investments 
B)  held for trading investments 
C)  investments in associates 
D)  bonds with a ten-year maturity

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

Securities that can be purchased for strategic purposes

Accepted Answer

A)  include only equity securities to influence relationships between companies. 
B)  include only debt investments. 
C)  include both equity securities and debt investments. 
D)  exclude both equity securities and debt investments. 
A)  include only equity securities to influence relationships between companies. 
B)  include only debt investments. 
C)  include both equity securities and debt investments. 
D)  exclude both equity securities and debt investments.

Question 9

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

Question 10

Debt investments earn interest revenue over time and the borrower has an obligation to return the original amount of the investment on a fixed maturity date.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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 13

Use the following information for questions.
On January 1, 2017, 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, 2017 was $48,500. Marianne sold the bonds on January 2, 2018 for $48,500.
-The entry to adjust to fair value on December 31, 2017 is

Accepted Answer

A)  No entry required. 
B)   
C)   
D)   
A)  No entry required. 
B)   
C)   
D)

Question 14

On October 1 of last year, Hand Tools Corp. purchased 1,500 shares of the Bindo Bank for $72,000 as a trading investment. At year end, December 31, the fair value of these shares was $75,000. On February 1 of this year, Hand Tools sold all these shares for $73,000. The realized gain (loss) that Hand Tools will report this year is

Accepted Answer

A)  a gain of $2,000. 
B)  a gain of $1,000. 
C)  a loss of $1,000. 
D)  a loss of $2,000. 
A)  a gain of $2,000. 
B)  a gain of $1,000. 
C)  a loss of $1,000. 
D)  a loss of $2,000.

Question 15

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 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

All of the following investments are generally shown at their fair value except

Accepted Answer

A)  short-term debt investments. 
B)  held for 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)  held for 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 19

The receipt of dividends from an investment affects the investment account when which of the following methods is used?

Accepted Answer

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

Question 20

On March 1, 2018, as a trading investment, Mahdi acquired 12% of the 250,000 issued common shares of Noah Limited at $8 per share. On July 1, 2018, Noah declared and paid a cash dividend of $2 per share. On December 31, 2018, Noah's reported net income was $654,000 for the year and its shares were trading at $7.50.InstructionsPrepare all necessary journal entries relating to these two investments for 2018 for Mahdi Corporation.

Accepted Answer

@#IMG-DLM& Note that, using the equity m

Account for non-strategic investments.

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

Which of the following would never be classified as a long-term investment?

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.

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

Securities that can be purchased for strategic purposes

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

Debt investments earn interest revenue over time and the borrower has an obligation to return the original amount of the investment on a fixed maturity date.

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

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.

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

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

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

All of the following investments are generally shown at their fair value except

The receipt of dividends from an investment affects the investment account when which of the following methods is used?

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

Account for non-strategic investments.

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

Which of the following would never be classified as a long-term investment?

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.

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

Securities that can be purchased for strategic purposes

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

Debt investments earn interest revenue over time and the borrower has an obligation to return the original amount of the investment on a fixed maturity date.

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

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.

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

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

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

All of the following investments are generally shown at their fair value except

The receipt of dividends from an investment affects the investment account when which of the following methods is used?

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