Exam 13: Investments

On January 1,2019,Barry Corporation paid $750,000 for 100,000 shares of Oak Company's common stock,which represents 40% of Oak's outstanding common stock.For the year ending December 31,2019,Oak reported net income of $190,000 and declared and paid cash dividends of $60,000.Barry should report the investment in Oak Company on its balance sheet at December 31,2019 at:

The amortized cost method determines the carrying value of held-to-maturity debt investments.

A company that owns 40% of the common stock of another business recognizes revenue from the investment when:

Cash dividends received on stock investments with less than 20% ownership of the investee should be credited to the Equity-Method Investment account.

Debt investments that are expected to be sold within the near term,with the intent of generating profits on the sale,are called:

Consolidated financial statements are prepared when a company owns ________ of the common stock of another company.

A company's investment with insignificant influence has a fair market value which exceeds its cost.When recording the year-end adjustment,the:

On January 1,2018,Winston Company purchased 4% bonds with a face value of $80,000 for par.Winston Company intends to hold the bonds until maturity and has the ability to do so.Interest is payable semiannually on July 1 and January 1.The company's fiscal year ends on December 31.The company uses the straight-line amortization method for discounts and premiums.The journal entry on December 31,2018 is:

A quoted bond price of 103 means that the bonds were sold at a discount.

On January 1 of the current year,Gardner Corporation purchased 29% of the common stock outstanding of Lance Corporation for $300,000.During the year,Lance Corporation reported net income of $80,000 and declared and paid cash dividends of $37,000.The balance of the Equity-method Investment account at December 31 for the current year,is:

When an investor owns 35% of the stock of another business,cash dividends received from the investee company are recorded by decreasing the Equity-method Investment account.

Acme Company owns 35% of Superior Company.Superior Company declared and paid $33,000 cash dividends for the year.Acme Company's journal entry to record the dividends includes a:

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

If an investor company owns 35% of the common stock of another business,the investor:

On January 1,2019,Corbin Company purchases $176,000,4% bonds at a price of 96 and a maturity date of January 1,2029.Corbin Company intends to hold the bonds until their maturity date and has the ability to do so.Interest is paid semiannually,on January 1 and July 1.Corbin Company has a calendar year end and uses the straight-line amortization method for discounts and premiums.The entry to amortize the bond discount or premium on July 1,2019 is:

If an investor owns less than 20% of the common stock of another company as a long-term investment:

Cash dividends received on stock investments with more than 20% ownership of the investee,but less than 50% ownership,should be credited to the Equity-method Investment Revenue account.

When an investor owns between 20% and 50% of the outstanding stock of another company,the ________ method is used to account for the stock investment.

An investment in bonds is categorized as a held-to-maturity investment if management intends to sell the investment before its maturity date.

Consolidated financial statements: