Exam 12: Investments

In accounting for stock investments of less than 20%, the equity method is used.

On January 1, 2014, Gene Corp. paid $800,000 for 100,000 shares of Onofine Company's common stock, which represents 30% of Onofine's outstanding common stock. Onofine reported net income of $200,000 and paid cash dividends of $60,000 during 2014. Gene should report the investment in Onofine Company on its December 31, 2014, balance sheet at:

Which of the following reasons best explains why a company that experiences seasonal fluctuations in sales may purchase investments in debt or stock securities?

Bay Company acquires 60, 8%, 5 year, $1,000 Community bonds on January 1, 2014 for $60,000. If Bay sells all of its Community bonds for $64,500, what gain or loss is recognized?

In recognizing a decline in the fair value of short-term stock investments, an unrealized loss account is debited because

The valuation of available-for-sale securities is similar to the procedures followed for trading securities, except that changes in fair value are not recognized in current income.

If a short-term debt investment is sold, the Investment account is

Available-for-sale securities are classified as

Which one of the following would not be classified as a short-term investment?

Under IFRS, equity investments are generally recorded and reported at

If the cost of an available-for-sale security exceeds its fair value by $40,000, the entry to recognize the loss

Under the equity method, the Stock Investments account is increased when the

Which of the following investment classifications are the same for GAAP and IFRS?

Which of the following is not a true statement regarding short-term debt investments?

When a parent company acquires a wholly owned subsidiary for an amount in excess of the book value of the net assets acquired, the excess is always allocated to goodwill.

The cost method of accounting for long-term investments in stock should be employed when the

Debt investments are investments in government and corporation bonds.

When recording bond interest, Interest Receivable is reported as a fixed asset in the balance sheet.

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

In accounting for stock investments between 20% and 50%, the _______ method is used.