Exam 14: Investments and International Operations

The controlling investor is referred to as the:

Detalo Co.held bonds of Schooner Corp.with a cost of $125,000 and a market value of $127,000.Detalo also held 1,500 shares of Tranco common stock with a cost of $25,000 and a market value of $24,700.These are classified as long-term available-for-sale securities.Prepare the journal entry to record the market value of the investments as of December 31.

Texana Inc.imports inventory from Mexico.Prepare the journal entries for Texana to record the following transactions.Include any year-end adjustments. Dec 21 Purchased inventory from Acquilla Co. for 500,000 Mexican pesos. The exchange rate was \ 0.0914 per peso. The credit terms were 1/30. Dec 31 The exchange rate was \ 0.0917 per peso. Jan 20 Paid Acquilla Co. for the December 21 purchase. The exchange rate was \ 0.0920 per peso.

Marina,Inc.,held 1,500 of Navia common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare the necessary journal entry to record this sale.

Return on total assets measures a company's ability to:

Consolidated financial statements show the financial position,results of operations and cash flows of all entities under the parent's control.

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

Vans purchased 40,000 shares of Skechers common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Return on total assets can be separated into the profit margin ratio and total asset turnover.

Micron owns 35% of Martok.Martok pays a total of $47,000 in cash dividends for the period.Micron's entry to record the dividend transaction would include a:

Define the foreign exchange rate between two currencies.Explain its effect on business transactions conducted in a foreign currency.

When an equity security is sold,the sale proceeds are compared with the cost and if the cost is greater than the proceeds,a gain on the sale of the security is recorded.

As a long-term investment,Elmer's Equipment Enterprise purchased 35% of Sticky Supplies Inc.'s 300,000 shares for $350,000 at the beginning of the fiscal year of both companies.On the purchase date,the fair value and book value of Sticky's net assets were equal.During the year,Sticky's earned net income of $430,000 and distributed cash dividends of 0.42 cents per share.The fair value of Sticky's assets at the end of the year totaled $349,450.What is Elmer's balance for this investment at the end of the year?

As a long-term investment,Elmer's Equipment Enterprise purchased 20% of Sticky Supplies Inc.'s 300,000 shares for $350,000 at the beginning of the fiscal year of both companies.On the purchase date,the fair value and book value of Sticky's net assets were equal.During the year,Sticky's earned net income of $430,000 and distributed cash dividends of 0.42 cents per share.The fair value of Sticky's assets at the end of the year totaled $349,450.What is Elmer's balance for this investment at the end of the year,assuming there is no significant control?

Available-for-sale debt securities are:

An investing company that owns _________ of another (investee)company's voting stock (but not more than 50%)is presumed to have a significant influence over the investee.

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

____________________________ are debt and equity securities that a company intends to actively manage and trade for a profit.

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

A company has net income of $250,000,net sales of $2,000,000 and average total assets of $1,500,000.Its return on total assets is equal to: