Current GAAP requires a company to recognize in its current net income any gain or loss from a change in the fair value of the derivative for a $\begin{array}{lll} & \text { Fair Value Hedge}& \text { Cash Flow Hedge}\\ \text { I. } & \text { yes } & \text { yes } \\ \text { II. } & \text { yes } & \text { no } \\ \text { III. } & \text { no } & \text { no } \\ \text { IV. } & \text { no } & \text { yes } \end{array}$

A) I B) II C) III D) IV A) I B) II C) III D) IV

An unconsolidated investee is referred to under IFRS and GAAP as an $\begin{array}{lll} & \text {IFRS} & \text {GAAP}\\ \text { I. } & \text { associate } & \text { equity method investe e } \\ \text { II. } & \text { equity method investee } & \text { associate } \\ \text { III. } & \text { associate } & \text { associate } \\ \text { IV. } & \text { equity method investee } & \text { equity method investe e} \end{array}$

A) I B) II C) III D) IV A) I B) II C) III D) IV

Exam 15: Investments

Exhibit 15-1 On January 1, 2010, Circle Corporation paid $900, 000 for 80, 000 shares of Birch Company's common stock, which represents 40% of Birch's outstanding common stock.Birch reported income of $300, 000 and paid a cash dividend of $100, 000 during 2010. - Refer to Exhibit 15-1.Circle should report income from the investment in Birch Company for 2010 of

(Multiple Choice)

4.8/5

(72)

Question 21

On July 1, 2010, Tom Company purchased $60, 000 of ten-year 6% bonds of Sawyer, Inc., for $51, 850, to be held to maturity.Interest is payable semiannually on June 30 and December 31.The effective yield on the investment is 8%.What amount of interest revenue should Tom record for the six-month period ended December 31, 2010?

(Multiple Choice)

4.9/5

(83)

Question 22

Under the equity method, a receipt of cash dividends by the investor would

(Multiple Choice)

4.9/5

(82)

Question 23

All of the following statements regarding available-for-sale debt securities are true except

(Multiple Choice)

4.8/5

(81)

Question 24

In 2010, Buckeye Corporation, for the first time, invested some idle funds in a variety of securities classified as available for sale, as described below: The company's year ends on December 31 and the bonds pay interest semiannually on January 1 and July 1. Required: Answer each of the following questions about Buckeye Corporation's investments:

(Essay)

4.9/5

(70)

Question 25

For available-for-sale securities, a decline in value due to a temporary decline in market value below cost is

(Multiple Choice)

4.9/5

(68)

Question 26

Unrealized gains and losses on investments in trading securities are reported

(Multiple Choice)

4.7/5

(78)

Question 27

David Company owns 30% of Ralph Company.During 2010, Ralph reported earnings of $500, 000 and paid cash dividends of 320, 000.What effect would this have on David's investment account and net income? Investment Account Net Income I. +\ 150,000 +\ 96,000 II. --- +\ 96,000 III. +\ 54,000 +\ 96,000 IV. +\ 54,000 +\ 150,000

(Multiple Choice)

4.8/5

(76)

Question 28

On January 1, 2010, Pinnacle, Inc.purchased 40% of the common stock of Valley Company for $61, 000.At the date of acquisition, the following information for Valley Company was available: In 2010, Valley earned $18, 000 of net income and distributed $12, 500 of dividends.How much investment income would Pinnacle record in 2010?

(Multiple Choice)

4.8/5

(79)

Question 29

When selecting the appropriate accounting for held-to-maturity securities, the company must

(Multiple Choice)

4.8/5

(78)

Question 30

Exhibit 15-2 On January 1, 2010, the Clumzee Company purchased 30% of the 1, 000, 000 shares of Nimble's common stock for $15, 000, 000 when 30% of Nimble's net assets totaled $12, 000, 000.The excess purchase price over the underlying assets was attributable to undervalued depreciable plant assets with a remaining useful life of ten years.Nimble reported net income of $8, 000, 000 and paid cash dividends of $2, 000, 000 during 2010. - Refer to Exhibit 15-2.The income reported by Clumzee during 2010 from its investment in the Nimble Company should be

(Multiple Choice)

4.7/5

(80)

Question 31

Investments in equity securities include all of the following except

(Multiple Choice)

4.9/5

(91)

Question 32

When bonds are purchased between interest dates, the accrued interest should be

(Multiple Choice)

4.9/5

(72)

Question 33

In a matched swap, the actual loan amount is

(Multiple Choice)

4.9/5

(81)

Question 34

Which of the following regarding available-for-sale securities is correct?

(Multiple Choice)

4.9/5

(83)

Question 35

Exhibit 15-2 On January 1, 2010, the Clumzee Company purchased 30% of the 1, 000, 000 shares of Nimble's common stock for $15, 000, 000 when 30% of Nimble's net assets totaled $12, 000, 000.The excess purchase price over the underlying assets was attributable to undervalued depreciable plant assets with a remaining useful life of ten years.Nimble reported net income of $8, 000, 000 and paid cash dividends of $2, 000, 000 during 2010. - Refer to Exhibit 15-2.The investment in Nimble Company stock should be reported on Clumzee's December 31, 2010, balance sheet at

(Multiple Choice)

4.9/5

(76)

Question 36

When the market value of a company's available-for-sale investments is lower than its cost, the difference should be

(Multiple Choice)

4.9/5

(73)

Question 37

Current GAAP requires a company to recognize in its current net income any gain or loss from a change in the fair value of the derivative for a Fair Value Hedge Cash Flow Hedge I. yes yes II. yes no III. no no IV. no yes

(Multiple Choice)

4.9/5

(83)

Question 38

An unconsolidated investee is referred to under IFRS and GAAP as an IFRS GAAP I. associate equity method investe e II. equity method investee associate III. associate associate IV. equity method investee equity method investe e

(Multiple Choice)

4.8/5

(67)

Question 39

Permanent value declines in available-for-sale securities should be

(Multiple Choice)

4.9/5

(82)

Question 40

Showing 21 - 40 of 101

Under the equity method, a receipt of cash dividends by the investor would

All of the following statements regarding available-for-sale debt securities are true except

For available-for-sale securities, a decline in value due to a temporary decline in market value below cost is

Unrealized gains and losses on investments in trading securities are reported

When selecting the appropriate accounting for held-to-maturity securities, the company must

Investments in equity securities include all of the following except

When bonds are purchased between interest dates, the accrued interest should be

In a matched swap, the actual loan amount is

Which of the following regarding available-for-sale securities is correct?

When the market value of a company's available-for-sale investments is lower than its cost, the difference should be

Current GAAP requires a company to recognize in its current net income any gain or loss from a change in the fair value of the derivative for a Fair Value Hedge Cash Flow Hedge I. yes yes II. yes no III. no no IV. no yes

An unconsolidated investee is referred to under IFRS and GAAP as an IFRS GAAP I. associate equity method investe e II. equity method investee associate III. associate associate IV. equity method investee equity method investe e

Permanent value declines in available-for-sale securities should be

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

The Income Statement and the Statement of Cash Flows

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Intangibles

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Contributed Capital

Earnings Per Share and Retained Earnings

Income Recognition and Measurement of Net Assets

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters