Exam 8: Long-Term Investments: The Time Value of Money

A long-term investment in available-for-sale securities was acquired at a cost of $40,000.At year-end,the fair value of the securities is $42,250.The year-end adjusting entry requires a:

In consolidation accounting,a year-end elimination entry is required to remove the subsidiary company's stockholders' equity accounts and the parent company's Investment in Subsidiary account.

An investor owns 30% of the outstanding common stock of Leshan Company.Leshan Company reports net income of $100,000 for the current year.What journal entry should the investor prepare?

Clarke Company owns all of the stock of Patterson Corporation and 80% of the stock of Tyra Corporation.Clarke Company earned net income of $750,000; Patterson earned $200,000; and Tyra earned $100,000.Clarke Company's consolidated income statement would report net income of:

Interest is the cost of using money.

The fair value of a long-term available-for-sale security has increased from the last carrying value.The company uses an allowance account to adjust the investment.The journal entry to record this increase will include:

Under the equity method,if an Equity-Method Investment is sold at a gain,the gain is:

The Allowance to Adjust Investment in Available-for-Sale Securities to Market account has a current credit balance of $892.Long-term available-for-sale investments with a cost of $17,000 have a current fair value of $18,500.The adjusting entry will require a:

An investor has a long-term available-for-sale stock investment.The investor receives a stock dividend on the stock investment.No journal entry is necessary for the stock dividend.

The Allowance to Adjust Investment in Available-for-Sale Securities to Market account is a liability account.

On January 1,2014,Bucket Company purchased as an investment a $1,000,7% bond for $980.Bucket plans to hold the bond until the maturity date of January 1,2024.The bond pays interest on January 1 and July 1.The company's fiscal year ends on December 31.The journal entry on December 31,2014 is:

Which of the following discount rates will produce the smallest present value of a single sum of money?

A foreign currency translation adjustment is reported as:

Interest is the difference between the amount borrowed and the principal on a note payable.

An investor receives a cash dividend from a long-term available-for-sale investment.Which journal entry is required?

For accounting purposes,the method used to account for long-term investments in common stock is determined by:

On January 1,2015,Dooley Company purchases $100,000,6% bonds at a price of 90.4 and a maturity date of January 1,2025.Dooley Company intends to hold the bonds until their maturity date.Interest is paid semiannually,on January 1 and July 1.Dooley Company has a calendar year end.The entry for the receipt of interest on July 1,2015 is:

The Allowance to Adjust Investment in Available-for-Sale Securities to Market account has a current credit balance of $1,000 after the adjustment at year-end.Available-for-sale investments have a fair value of $20,000.The original cost of the investments was $21,000.The carrying value of the investments is:

The cash received from selling available-for-sale investments is reported on the statement of cash flows as a(n):

Long-term investments include: