Exam 14: Time Value of Money

On January 1, Belvedere Company purchased as an investment a $1,000, 7% bond for $1,000. The bond pays interest on January 1 and July 1. What is the entry to record the interest accrual on December 31?

Under the equity method, the receipt of dividends from the investee company results in an increase in the Stock Investments account.

If you are able to earn a 6% rate of return, what amount would you need to invest to have $6,500 one year from now?

If a company acquires a 40% common stock interest in another company

Assume that Chapman's Inc.'s trading securities have a total cost of $185,000 and a total fair value of $215,000 at year end. The related adjusting entry would include a debit to

The company whose stock is owned by the parent company is called the

Travis Tucker invests $10,655.04 now for a series of $1,500 annual returns beginning one year from now. Travis will earn 10% on the initial investment. How many annual payments will Travis receive?

The purchase of a company that is in the same industry and involved in the same activity is called a

In order to compute the present value of an annuity, it is necessary to know the 1) discount rate. 2) number of discount periods and the amount of the periodic payments or receipts.

King Corporation purchased 1,000 shares of Cable common stock ($50 par) at $73 per share as a short-term investment. The shares were subsequently sold at $77 per share. The cost of the securities purchased and gain or loss on the sale were

If $22,000 is deposited in a savings account at the end of each year and the account pays interest of 5% compounded annually, what will be the balance of the account at the end of 10 years?

Which of the following is not a category used for valuing and reporting investments?

Chopper Company owns 10% interest in the stock of Elton Corporation. During the year, Elton pays $10,000 in dividends to Chopper, and reports $400,000 in net income. Chopper Company's investment in Elton will increase Chopper net income by

Why do pension and mutual funds invest in debt and equity securities?

The Fair Value Adjustment account is a balance sheet account. Identify the asset account it is related to. Explain how this account is increased and describe the procedure followed when its related asset account is disposed of.

Dividends received on stock investments of less than 20% should be credited to the Stock Investments account.

On January 1, 2014, JBT Company purchased at face value, a $1,000 6%, bond that pays interest on January 1 and July 1. JBT Company has a calendar year end. The entry for the receipt of interest on July 1, 2014, is

All of the following statements about short-term investments are true except

All of the following factors would be signs of an investor's significant influence over an investee except

Montz Company is considering investing in an annuity contract that will return $80,000 annually at the end of each year for 12 years. Montz has obtained the following values related to the time value of money to help in its planning process and compounded interest decisions. To the closest dollar, what amount should Montz Company pay for this investment if it earns a 9% return?