Exam 19: Accounting for Investments

It is not possible for one company to influence the operating policies of another company unless it owns more than a 50 percent interest in that company.

All of the following are conditions that could affect the valuation of investments on the balance sheet except

For available-for-sale securities,an unrealized loss on long-term investments appears as part of other comprehensive income (loss)in the company's financial statements.

When the cost-adjusted-to-market method is used to account for an investment in stock,dividends received are accounted for as an increase to dividend income.

When bonds are intended to be held to maturity,they are accounted for at

Winters Corporation purchased 15,000 shares of Poores Corporation common stock for $60 per share on January 2,2014.Poores Corporation reported net income of $1,500,000 for 2014 and paid dividends of $300,000 during 2014.Poores has a total of 50,000 shares of common stock outstanding.The entry that would be recorded to recognize the income is:

Stock categorized as trading securities is purchased for $72,000.At year end,when the market value of the stock is $63,000,the adjusting entry that would be recorded is:

When the cost-adjusted-to-market method is used to account for a long-term investment in the stock of another company,the carrying value of the investment is directly affected by

Which type of investment,if any,could be classified as short- or long-term,as well as debt or equity?

For available-for-sale equity securities,the Allowance to Adjust Long-Term Investments to Market account should be reported as a(n)

Under the equity method of accounting for a stock investment,a proportionate share of the investee's income is recorded on the investor's records.

All the interest income on U.S.Treasury bills is recorded at maturity.

Unrealized Loss (Gain)on Short-Term Investments is a contra-asset account that will appear on the balance sheet.

Winters Corporation purchased 15,000 shares of Poores Corporation common stock for $60 per share on January 2,2014.Poores Corporation reported net income of $1,500,000 for 2014 and paid dividends of $300,000 during 2014.Poores has a total of 50,000 shares of common stock outstanding.The entry that would be recorded to recognize the receipt of cash dividend is:

A noninfluential and noncontrolling investment is defined as ownership of less than 25 percent of the stock of another company.

At year-end,a company's trading portfolio appears as follows: The adjusting entry will include

Available-for-sale securities may only be classified as short-term investments.

An individual can be prosecuted by the SEC for insider trading whether or not that individual is employed by the company involved.

Investments are valued on the balance sheet at the original purchase price,even if the price has changed since the date of purchase.

The year-end adjusting entry to reflect an increase in the value of trading securities includes a