Exam 15: Investments and International Operations

A company had a profit margin of 10.5% and total asset turnover of 1.84.Its return on total assets was:

Landers,Inc. ,held 1,500 of Shipman Company common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare Lander's journal entry to record this sale.

A company has net income of $250,000,net sales of $2,000,000,and average total assets of $1,500,000.Its return on total assets equals:

Six months ago,a company purchased an investment in stock for $70,000.The investment is classified as available-for-sale securities.The current fair value of the stock is $68,500.The company should record a:

Short-term investments in held-to-maturity debt securities are accounted for using the ______________________.

Segmental Manufacturing owns 35% of Glesson Corp.stock.Glesson pays a total of $47,000 in cash dividends for the period.Segmental's entry to record the dividend transaction would include a:

Cloverton Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

On July 31,Potter Co.purchased 2,000 shares of GigaTech stock for $16,000.The investment is classified as available-for-sale securities.On October 31,which is Potter's year-end,the stock had a fair value of $20,000.Potter should record a:

When one company owns more than 50% of another company's voting stock and has control over the investee company,the investee is called the _______________________.

Arkansana Inc.imports inventory from Costa Rica.Prepare the journal entries for Arkansana to record the following transactions.Include any year-end adjustments.

Available-for-sale securities are actively managed like trading securities because the company intends to trade them for profit in the short term.

All of the following are true about debt securities except:

On January 3,Kostansas Corporation purchased 5,000 shares of Morton,Inc.for $40 per share plus $700 in broker commissions.These shares represent a 40% ownership in Morton,Inc.Prepare the journal entry Kostansas Corporation should record for the receipt of cash dividends of $2 per share from Morton on July 10.

A company reported net income for Year 1 of $98,000 and $106,000 for Year 2.It also reported net sales of $835,000 in Year 1 and $918,000 in Year 2.The company's average total assets in Year 1 were $1,850,000 and $1,720,000 in Year 2.Calculate the company's profit margin,total asset turnover and return on total assets for Year 1and Year 2.Comment on the results.

Strickland Corporation has invested in 10% of the outstanding stock of Nez Corporation.Strickland intends to actively manage this investment for profit.This investment is classified as:

Long-term investments include:

Accounting for long-term investments in equity securities with controlling influence uses the:

Investments can be classified as all but which of the following?

All of the following statements regarding accounting for trading securities under U.S.GAAP are true except:

Multinational corporations can be U.S.companies with operations in other countries.