Exam 17: Investments

Use the following information for 82 and 83. On January 3, 2014, Moss Company acquires $300,000 of Adam Company's 10-year, 10% bonds at a price of $319,254 to yield 9%. Interest is payable each December 31. The bonds are classified as held-to-maturity. -Assuming that Moss Company uses the straight-line method, what is the amount of premium amortization that would be recognized in 2016 related to these bonds?

Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Crane Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Hudson Company.

Held-to-maturity securities are reported at

Which of the following is not a debt security?

Use the following information for questions 87 and 88. Instrument Corporation has the following investments which were held throughout 2014-2015: -What amount of gain or loss would Instrument Corporation report in its income statement for the year ended December 31, 2015 related to its investments?

Impairments are

Investments in debt securities are generally recorded at

Korman Company has the following securities in its portfolio of trading securities on December 31, 2014: All of the securities had been purchased in 2014. In 2015, Korman completed the following securities transactions:March 1 Sold 5,000 shares of Thomas Corp., Common @ $31 less fees of $1,500.April 1 Bought 600 shares of Werth Stores, Common @ $45 plus fees of $550.The Korman Company portfolio of trading securities appeared as follows on December 31, 2015: InstructionsPrepare the general journal entries for Korman Company for: (a) the 2014 adjusting entry. (b) the sale of the Thomas Corp. stock. (c) the purchase of the Werth Stores' stock.(d) the 2015 adjusting entry.

Use the following information for 82 and 83. On January 3, 2014, Moss Company acquires $300,000 of Adam Company's 10-year, 10% bonds at a price of $319,254 to yield 9%. Interest is payable each December 31. The bonds are classified as held-to-maturity. -Assuming that Moss Company uses the effective-interest method, what is the amount of interest revenue that would be recognized in 2015 related to these bonds?

Use the following information for questions 108 and 109. Tracy Company owns 4,000 of the 10,000 outstanding shares of Penn Corporation common stock. During 2015, Penn earns $300,000 and pays cash dividends of $100,000. -If the beginning balance in the investment account was $600,000, the balance at December 31, 2015 should be

Use of the effective-interest method in amortizing bond premiums and discounts results in

Valet Corporation began operations in 2015. An analysis of Valet's equity securities portfolio acquired in 2015 shows the following totals at December 31, 2015 for trading and available-for-sale securities: What amount should Valet report in its 2015 income statement for unrealized holding loss?

All of the following statements regarding accounting for derivatives are correct except that

Use the following information for questions 115 through 117. Rich, Inc. acquired 30% of Doane Corporation's voting stock on January 1, 2014 for $800,000. During 2014, Doane earned $320,000 and paid dividends of $200,000. Rich's 30% interest in Doane gives Rich the ability to exercise significant influence over Doane's operating and financial policies. During 2015, Doane earned $400,000 and paid dividends of $120,000 on April 1 and $120,000 on October 1. On July 1, 2015, Rich sold half of its stock in Doane for $528,000 cash. -Before income taxes, what amount should Rich include in its 2014 income statement as a result of the investment?

Debt securities include corporate bonds and convertible debt, but not U.S. government securities.

IFRS requires that gains and losses on available-for-sale securities be reported directly in equity.

Use the following information for questions 7 and 8 Rushia Company has an available-for-sale investment in the 10%, 10-year bonds of Pear Company The investment's carrying value is $3,200,000 at December 31, 2014. On January 9, 2015, Rushia learns that Pear Company has lost its primary manufacturing facility in an uninsured fire. As a result, Rushia determines that the investment is impaired and now has a fair value of $2,300,000. In June, 2016, Pear Company has succeeded in rebuilding its manufacturing facility, and its prospects have improved as a result. -If Rushia Company determines that the fair value of the investment is now $2,900,000 and is using IFRS for its external financial reporting, which of the following is true?

Jordan Company purchased ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. One step in calculating the issue price of the bonds is to multiply the principal by the table value for

In accounting for investments in debt securities that are classified as trading securities,

The following information relates to Windom Company for 2015: Windom's 2015 other comprehensive income is