Exam 15: Investments and International Operations

Explain how equity securities having significant influence are accounted for and reported in the financial statements.Include a discussion of the criterion for these securities in terms of an investee's voting stock.

A company had net income of $2,660,000,net sales of $25,000,000,and average total assets of $8,000,000.Its return on total assets is equal to:

A company had net income of $76,000 in 2012 and $88,000 in 2013.Its net sales were $640,000 in 2012 and $611,000 in 2013.Its average total assets in 2012 were $670,000 and $712,000 in 2013.Calculate the profit margin,total asset turnover,and return on total assets for both years.Comment on the results.

Consolidated statements are prepared as if a company is organized as one entity,with the amounts allocated for subsidiaries reported in the investment accounts.

Micron owns 3,000 shares of JVT.JVT has 25,000 total shares of stock outstanding.JVT paid $3 per share in cash dividends to its stockholders.Micron should record a:

On October 31,Mayfair Co.received cash dividends of $0.15 per share from its investment in Carter Corp.'s common stock.Mayfair owned 1,200 shares of Carter Corp.'s stock on October 31.The investment is considered available for sale.Prepare the investor's journal entry to record the receipt of the cash dividends.

___________________________ are investments in securities that management intends to convert to cash within one year or the operating cycle,whichever is longer,and are readily convertible to cash.

On May 1,Franke Co.purchases 2,000 shares of Computech stock for $25,000.This investment is considered to be an available-for-sale investment.On July 31 (Franke's year-end),the stock had a market value of $28,000.Franke should record a credit to Unrealized Gain-Equity for $3,000.

Return on total assets can be separated into the profit margin ratio and total asset turnover.

A company had net income of $82,000,net sales of $781,000,and average total assets of $300,000.Its profit margin and total asset turnover were respectively:

An investing company that owns more than ________ of another (investee) company's voting stock is presumed to have controlling influence over the investee.

If the exchange rate for Canadian and U.S.dollars is 0.7382 to 1,this implies that 2 Canadian dollars will buy 1.48 worth of U.S.dollars.

On January 1,2012,Frederich Corporation purchased 7,500 shares of Sport Tech,Inc.as a long-term investment for a total of $235,000.The 7,500 shares represent 30% of the outstanding (25,000) shares of Sport Tech.Prepare the journal entries for Frederich to record the following transactions and events:

Available-for-sale debt securities are:

Any cash dividends received from equity securities are recorded as Dividend Expense.

Kramer Corporation had the following long-term investment transactions. Prepare the journal entries Kramer Corporation should record for these transactions and events.

Sanuk purchased on credit £20,000 worth of parts from a British company when the exchange rate was $1.66 per British pound.At the year-end balance sheet date,the exchange rate increased to $1.69.Sanuk must record a gain of $600.

Investments in trading securities are accounted for using the equity method with consolidation.

Investments in debt and equity securities that the company actively manages and trades for profit are referred to as short-term investments in:

Held-to-maturity securities are: