Exam 15: Investments and International Operations

Bawl Corp.acquired 100 shares of Darkness,Inc.for $75 per share for its trading portfolio.At December 31,2014,the value of the stock was $95 per share.How would Bawl record the adjustment to fair value?

Debt securities are recorded at cost when purchased and interest revenue from investments in debt securities is recorded when earned.

Short-term investments are readily convertible to cash and are intended to be converted into cash within one year or the operating cycle,whichever is longer.

The equity method with consolidation is used in accounting for long-term investments in equity securities with controlling influence.

Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it accrues.

On January 2,2014,Palmer Corp.paid $500,000 cash to acquire 400,000 shares of stock in Prescott Corp.These shares represent 40% of Prescott's total outstanding stock.How would Palmer record this transaction using the equity method?

A company had investments in long-term available-for-sale securities.At the end of the current year,the company's portfolio had a $162,000 cost and $164,000 market value. What is the current year's adjustment to market value given the following account balances at the end of the prior year?

On January 2,2014,Parade Corp.paid $50,000 cash to acquire 400,000 shares of stock in Band Corp.These shares represent 40% of Band Corp.'s total outstanding stock.Parade accounted for this acquisition using the equity method.On December 31,2014,Band Corp.paid $2,000 in dividends to Parade.How would the company record this transaction?

An investor with significant influence owns as least 20%,but not more than 50%,of another company's voting stock.

Foreign exchange rates fluctuate due to many factors including changing political and economic conditions.

On June 15,2014,Bellows Corp.acquired 100 shares of Sonny,Inc.for $75 per share as a trading security.On December 17,2014,Bellows sold the stock for $115 per share.How would the company record this transaction?

What are the accounting basics for equity securities,including acquisition,dividends earned,and disposition?

An increase in the price of the U.S.dollar against other currencies puts U.S.companies in a stronger competitive position internationally.

A company had net income of $2,785,000,net sales of $250,000,000,average total assets of $6,000,000,and equity investments of $40,000.Its return on total assets equals:

The following information is available from the financial statements of Cosmotropolis: What is Cosmotropolis' return on total assets for 2014?

The following information is available from the financial statements of Cosmotropolis: What is Cosmotropolis' return on total assets for 2013?

Held-to-maturity securities are equity securities a company intends and is able to hold until maturity.

Trading securities are securities that are purchased by trading other securities rather than by paying cash.

The currency in which a company presents its financial statements is known as the: