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Exam 15: Investments and International Operations

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Question 81

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Identify the classifications for non-influential investments in securities.What are the accounting basics for non-influential investments in securities,including acquisition,dividends earned,and disposition?

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Non-influential investments in securitie...

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Question 82

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A company had net income of $450,000 in Year 1 and $620,000 in Year 2.The company had average total assets of $2,500,000 in Year 1 and $3,000,000 in Year 2.Calculate the return on total assets for Year 1and Year 2.Comment on the results,did the company's performance improve?

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(a)Year 1: $450,000 / $2,500,000 = 18.0%...

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Question 83

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

All of the following statements regarding other comprehensive income are true except:

At acquisition,debt securities are:

A company has net income of $130,500.Its net sales were $1,740,000 and its average total assets were $2,750,000.Its total asset turnover equals 4.7%.

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

Trading securities are always reported as current assets.

Hamilton Company owns 51,000 of Hennie Company's 100,000 outstanding shares of common stock.Hennie Company pays $25,000 in total cash dividends to its shareholders.Hamilton's entry to record this transaction should include a:

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

Long-term investments in held-to-maturity debt securities are accounted for using the ___________________________.

On November 12,Kera,Inc.,a U.S.Company,sold merchandise on credit to Kakura of Japan at a price of 1,500,000 yen.The exchange rate was $0.00837 on the date of sale.On December 31,when Kera prepared its financial statements,the exchange rate was $0.00843.Kakura paid in full on January 12,when the exchange rate was $0.00861.On January 12,Kera should prepare the following journal entry:

A company holds $40,000 of 7% bonds as a held-to-maturity security.Assuming all prior interest entries have been accounted for,the bondholder's journal entry to record receipt of the semiannual interest payment includes a debit to Cash for $2,800 and a credit to Interest Revenue for $2,800.

________________________ refers to all changes in equity for a period except for those due to investments and distributions to owners.

Everrine Corporation owns 30% of JRW Corporation.Everrine Corporation received $9,000 in cash dividends from JRW Corporation.The entry to record receipt of these dividends is:

An investor purchased $50,000 of bonds and holds them to maturity.The investor's journal entry to record the proceeds should include a debit to Cash for $50,000 and a credit to Long-Term Investments for $50,000.

If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment,which method would the investor normally use to account for this investment?

When using the equity method for investments in equity securities,the investor records the receipt of cash dividends as revenue.

On February 15,Seacroft buys 7,000 shares of Kebo common at $28.53 per share plus a brokerage fee of $400.The stock is classified as available-for-sale securities.On March 15,Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15.Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250.The fair value of the remaining shares if $29.50 per share.The amount that Seacroft should report in the asset section of its year-end December 31 balance sheet for its investment in Kebo is:

The cost method of accounting is used for long-term investments in equity securities with significant influence.