Exam 7: Investments and the Time Value of Money

Under the equity method the investor's share of dividends is treated as a return of investment.

How does a company such as ATCO Ltd.report the results of its diverse worldwide lines of business?

A non-controlling interest arises only when a parent company purchases:

Under ASPE a reporting an organization can use either the effective interest rate method or straight line to account for the amortization of their bond investment.

Investment in subsidiaries involves purchasing 25% of the organization's shares.

A long-term investment in common shares acquired during 2014 at a cost of $45,000 has a market value on December 31,2014,of $45,725.The year-end adjusting entry requires a:

A short-term investment is not:

Amortization of a discount on a long-term bond investment will decrease the amount of interest revenue recorded by the investor.

Companies with investments accounted for by the equity method often refer to the investee as a(n):

Investments accounted for using the equity method are initially recorded at:

On January 1,2016,TXU Europe Corporation purchased 40% of the outstanding stock of Alberta Power Pool Corporation for $800,000.Net income reported by Alberta Power Pool Corporation for 2016 and 2017 was,respectively,$100,000 and $125,000.Dividends paid by Alberta Power Pool Corporation during 2016 and 2017 were,respectively,$60,000 and $75,000.The long-term investment will appear on TXU Europe Corporation's December 31,2017,balance sheet at:

All of the following are necessary to compute the future value of a single amount except the:

The journal entry to record the receipt of a cash dividend will include a credit to Retained Earnings.

Goodwill arises when a parent company must pay more to acquire a subsidiary company than the market value of the subsidiary's net assets.

Amortizing a discount on a bond investment will cause the Investment account and interest revenue to respectively:

Purchases of bonds of other companies are reported as financing activities on the cash-flow statement.

On March 1,2017,Uncontracted Capacity Company (UCC)purchased $20,000 of Utility Service Corporation's 9% bonds at a purchase price of 90.Uncontracted Capacity Company,whose year end is December 31,expects to hold the bonds until their maturity date 5 years from the date of purchase.Interest on the bonds will be paid every March 1 and September 1 until maturity.Assuming that UCC is a private corporation that elects to amortize premium or discounts using straight-line amortization,how much total interest revenue will be recorded by UCC on September 1,2017?

The journal entry to record the sale of an investment includes a loss on sale of investment for $500.The income statement will reflect:

The purchase of long-term investments would appear on a cash flow statement in the:

The receipt of a cash dividend arising from an investment (5% ownership)held by a company requires a: