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

The investor should generally use the equity method of accounting for the investee if the investor owns what percentage of the outstanding stock of the investee?

If a U.S. company sells merchandise to a German company, the German company may settle the transaction in Euros.

On purchase date, Available-for-sale investments in stock are recorded at:

On the balance sheet, assets are listed by dollar amount (lowest to highest).

Under the equity method of accounting for stock investments, the Investment account is increased when the:

A U.S. Company sells to a French company. The French company will pay in Euros. If the euro strengthens before the U.S. Company collects, the U.S. Company will have a foreign-currency transaction loss.

Under the equity method, if the investee company has a net loss, then the investor company will:

When the investment is readily convertible to cash and the investor plans to convert the investment to cash within one year, the investment is shown on the balance sheet as:

On the balance sheet, available-for-sale investments in stock are reported as:

Acme Company owns 35% of Superior Company. Superior Company paid $35,000 cash dividends for the year. Acme Company's journal entry to record the dividends includes a:

Dole Company, the subsidiary company, borrowed $80,000 from Anderson Company, the parent company, on a note payable during the year. Before the consolidation entries were made, the balances in Anderson Company's Notes Receivable and Notes Payable accounts were $180,000 and $275,000, respectively. A consolidated balance sheet shows:

The equity method is used to account for stock investments in which the investor company owns less than 20%.

Interest is the difference between the amount borrowed and the principal.

Bond investments are initially recorded at cost.

Bond investments are initially recorded at:

Investments can never be classified as short-term investments.

In present value calculations, the process of determining the present value is called:

In computing the present value of an annuity, it is not necessary to know the number of discount periods.

When a company owns more than 50% of the common stock of another company:

When the exchange rate of nation A's currency rises relative to another nation's currency, the currency of nation A is said to have strengthened.