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Exam 15:Investments

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Question 61

True/False

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The financial statements resulting from combining parent and subsidiary statements are called consolidated statements.

A) True
B) False

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Question 62

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An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?

A) $12,750 gain
B) $600 gain
C) $600 loss
D) $9,250 loss

E) All of the above
F) A) and B)

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Question 63

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Any difference between the fair values of the securities and their cost is a realized gain or loss.

Blanton Corporation purchased 15% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the dividends it receives?

If one company owns more than 50% of the common stock of another company

Armando Company owns 17,000 of the 70,000 shares of common stock outstanding of Tito Company and exercises a significant influence over its operating and financial policies. The investment should be accounted for by the

The company whose stock is more than 50% owned by another company is called the

On May 1, Pierce Company purchased $60,000 of Stanton Company's 12% bonds at 100 plus accrued interest of $2,400. On June 30, Pierce received its first semiannual interest. On February 1, Pierce sold $50,000 of the bonds at 103 plus accrued interest. ​ -What are the total proceeds from the February 1 sale?

The Valuation Allowance for Trading Investments account is found on the

On May 1, Cedar Inc. purchases $100,000 of 10-year, Madison Corporation 6% bonds dated March 1 at 100 plus accrued interest. What entry would Cedar record when receiving its semiannual interest on September 1?

The amount of interest paid when buying a bond as an investment should be credited to Interest Revenue.

On February 12, Addison, Inc. purchased 6,000 shares of Lucas Company at $22 per share plus a $240 brokerage fee. On August 22, Lucas paid a $0.42 dividend per share. On November 10, 4,000 shares of Lucas stock were sold for $28 per share less a $160 brokerage fee. The journal entry to record the purchase under the fair value method would include a

Long-term investments are held for all of the listed reasons below except

Temporary investments such as in trading securities are

Which of the following is not a reason to invest excess cash in temporary investments?

If the proceeds from the sale of bond investments exceed the balance of the investment amount, a gain is realized.

On May 1, Pierce Company purchased $60,000 of Stanton Company's 12% bonds at 100 plus accrued interest of $2,400. On June 30, Pierce received its first semiannual interest. On February 1, Pierce sold $50,000 of the bonds at 103 plus accrued interest. ​ -The journal entry Pierce will record on June 30 will include a

Discuss the similarities and differences in reporting trading securities, available-for-sale securities, and held-to-maturity securities.

Financial statements include assets listed at

Jarvis Corporation makes an investment in 100 shares of Saxton Company's common stock. The stock is purchased for $45 a share plus brokerage fees of $280. The entry for the purchase is ?