Exam 15: Investments and International Operations

On January 1,2014,Newark Corp.paid $60,000 plus a brokerage fee in the amount of $600 to buy Escalade's 8%,two-year bonds payable with a $60,000 par value.Newark intended to hold the bonds until their maturity date of December 31,2016.At maturity,Newark received the bond proceeds (not including the interest,which had already been paid).How would the company record the receipt of the proceeds at maturity?

Clark Corporation purchased 40% of IT corporation for $125,000 on January 1.On May 20 of the same year,IT Corporation declared total cash dividends of $30,000.At year-end,IT Corporation reported net income of $150,000.The balance in Clark Corporation's Long-Term Investment in IT Corporation account as of December 31 should be:

Columbia Corp.held 1,500 of Vianco common stock with a cost of $74,387.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $55,275.Prepare the journal entry to record this sale.

A company had net income of $43,000,net sales of $380,500,and average total assets of $220,000.Its profit margin and total asset turnover were,respectively:

A company holds $40,000 of 7% bonds as a held-to-maturity security.The bondholder's journal entry to record receipt of the semiannual interest payment includes a debit to Cash for $2,800 and a credit to Interest Revenue for $2,800.

Explain how available-for-sale debt and equity securities are accounted for at and after acquisition and how they are reported in financial statements.