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As with other assets,the cost of a bond investment includes all costs related to the purchase.

A) True
B) False

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A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share.The market value of the stock is $16 per share.The company's dividend yield is


A) 2.5%
B) 400%
C) 16%
D) 40%

E) A) and C)
F) A) and D)

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Match each of the definitions that follow with the appropriate investment term (a-j) . -Combined reporting of a corporation and other corporations it controls


A) Equity method
B) Parent company
C) Subsidiary company
D) Consolidated financial statements
E) Fair value
F) Unrealized gain or loss on investments.
G) Valuation allowance for investments
H) Dividend yield
I) Amortized cost
J) Cost method

K) B) and H)
L) F) and J)

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Trading securities are


A) reported at fair value on the balance sheet and as unrealized gains or losses on the income statement
B) not reported on the balance sheet
C) reported as unrealized gains or losses on the income statement
D) reported at fair value in the balance sheet

E) A) and B)
F) A) and C)

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Which of the following items would not affect the investor's income for the period?


A) interest received on a temporary investment in bonds
B) dividends received on a long-term investment in stock where the investor owns 10% of the investee's stock
C) dividends received on a long-term investment in stock where the investor owns 30% of the investee's stock
D) interest received on a long-term investment in bonds

E) B) and C)
F) A) and B)

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Match each of the definitions that follow with the appropriate investment term (a-j) . -Recognition of changes in the fair value of short-term investments


A) Equity method
B) Parent company
C) Subsidiary company
D) Consolidated financial statements
E) Fair value
F) Unrealized gain or loss on investments.
G) Valuation allowance for investments
H) Dividend yield
I) Amortized cost
J) Cost method

K) C) and F)
L) E) and G)

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GAAP requires trading and available-for-sale investments to be reported at their


A) fair value
B) historical cost
C) market value
D) net realizable value

E) A) and C)
F) B) and C)

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Temporary investments


A) are reported as current assets
B) include cash equivalents
C) do not include equity securities
D) All of these choices

E) A) and B)
F) A) and C)

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Skyline,Inc.purchased a portfolio of available-for-sale securities during the current fiscal year.The cost and fair value of this portfolio on December 31 were as follows:​​ Skyline,Inc.purchased a portfolio of available-for-sale securities during the current fiscal year.The cost and fair value of this portfolio on December 31 were as follows:​​ (a)Provide the journal entry to record the adjustment of the available-for-sale security portfolio to fair value on December 31. (b)Where will the information from the journal entry be reported on the financial statements? (a)Provide the journal entry to record the adjustment of the available-for-sale security portfolio to fair value on December 31. (b)Where will the information from the journal entry be reported on the financial statements?

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(b)The unrealized gain will be reporte...

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Parker Company owns 83% of the outstanding stock of Tadeo Company.Parker Company is referred to as the


A) parent
B) minority interest
C) affiliate
D) subsidiary

E) C) and D)
F) B) and D)

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Temporary investments such as in trading securities are


A) recorded at cost but reported at fair market value
B) recorded at cost and reported at cost
C) recorded at cost but reported at lower of cost or fair market value
D) recorded at fair market value and reported at fair market value

E) None of the above
F) A) and B)

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The journal entry Pierce will record on February 1 will include a


A) credit to Interest Revenue for $1,500
B) credit to Gain on Sale of Investments for $1,500
C) credit to Cash for $52,500
D) credit to Interest Receivable for $600

E) B) and C)
F) A) and B)

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Prepare the journal entries for the following transactions for Morgan Co.​ Prepare the journal entries for the following transactions for Morgan Co.​

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July 1 blured image De...

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Unrealized gains and losses on trading securities are not included in the calculation of income from operations.

A) True
B) False

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When the cost method is used to account for an investment,the carrying value of the investment is affected by


A) the dividend distributions of the investee
B) the periodic net income of the investee
C) the earnings and dividend distributions of the investee
D) neither the earnings nor the dividends of the investee

E) C) and D)
F) A) and B)

Correct Answer

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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 dividend per share of $0.42.On November 10,4,000 shares of Lucas stock were sold for $28 per share less a $160 brokerage fee.The journal entry for the sale would include a


A) debit to Cash, $111,840
B) credit to Investments-Lucas Company Stock, $112,000
C) credit to Loss on Sale, $23,680
D) debit to Cash, $112,000

E) A) and B)
F) A) and C)

Correct Answer

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In order to maintain a record of the original cost of a trading security,the fair value adjustments are debited or credited to the account Valuation Allowance for Trading Investments.

A) True
B) False

Correct Answer

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Match each of the definitions that follow with the appropriate investment term (a-j) . -The method of reporting an investment that represents less than 20% of the voting stock of another company


A) Debt securities
B) Equity securities
C) Investor
D) Investee
E) Cost method
F) Trading securities
G) Available-for-sale securities
H) Held-to-maturity securities
I) Equity method
J) Business combination

K) B) and J)
L) A) and E)

Correct Answer

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Present entries to record the following selected transactions of Masterson Co.​ Present entries to record the following selected transactions of Masterson Co.​

Correct Answer

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Aug.1 blured image Aug...

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Skyline,Inc.purchased a portfolio of trading securities during the current fiscal year.The cost and fair value of this portfolio on December 31 were as follows:​​ Skyline,Inc.purchased a portfolio of trading securities during the current fiscal year.The cost and fair value of this portfolio on December 31 were as follows:​​ (a)Provide the journal entry to record the adjustment of the trading security portfolio to fair value on December 31. (b)Where will the information from the journal entry be reported on the financial statements? (a)Provide the journal entry to record the adjustment of the trading security portfolio to fair value on December 31. (b)Where will the information from the journal entry be reported on the financial statements?

Correct Answer

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​
(b)The unrealized loss will ...

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