Exam 26: Investments

On May 15,Tumbleweed,Inc.purchased notes of Dansell Corp.for $80,000.This is considered to be an available-for-sale debt investment.This is the company's first and only investment in available-for-sale debt securities.On Tumbleweed's September 30 year-end,the notes had a fair value of $85,000.The $5,000 difference in fair value must be reported on Tumbleweed's income statement as a $5,000 unrealized gain.

To prepare consolidated financial statements when a U.S.parent company has an international subsidiary,the international subsidiary's financial statements must be translated into U.S.dollars.

All of the following statements regarding accounting for trading debt securities under U.S.GAAP are true except:

All companies desire a low return on total assets.

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

Segmental Manufacturing owns 35% of Glesson Corp stock.Glesson pays a total of $47,000 in cash dividends for the period.Segmental's entry to record the cash dividend received from Glesson would include a:

The investee company in a long term investment with controlling interest is called the:

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds,at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for these securities are true except:

Pravis Corporation owns 30% of Kuster Corporation.Pravis Corporation received $9,000 in cash dividends from Kuster Corporation.The entry to record receipt of these dividends is:

Multinational corporations can be U.S.companies with operations in other countries.

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

When using the equity method,receipt of cash dividends increases the book value of an investment in equity securities.

When one company owns more than 50% of another company's voting stock and has control over the investee company,the investee is called the ________.

Marshall Company sold supplies in the amount of €25,000 (euros)to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

On February 15,Jewel Company buys bonds of Marcelo Corp.for $200,110 cash.This debt investment is classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.Jewel Company sells 40% of the Marcelo Corp.debt investment on November 17 of the current year for $102,200 cash.The entry to record this sale includes a:

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

At acquisition,debt securities are:

Foreign exchange rates fluctuate due to changing ________ and ________ conditions.

Zhang Corp.owns 40% of Magnor Company's common stock.Magnor pays $97,000 in total cash dividends to its shareholders.Zhang's entry to record the cash dividend received from Magnor would include a:

Trading debt securities are reported as long-term assets.