Exam 12: Investments

Corporations invest in other companies for all of the following reasons except to

The Fair Value Adjustment account can only have a credit balance or a zero balance.

Revenue is recognized when cash dividends are received under

Corporations purchase investments in debt or stock securities generally for one of two reasons.

If 10% of the common stock of an investee company is purchased as a long-term investment, the appropriate method of accounting for the investment is

The contra-account, Fair Value Adjustment, is also called a(n)

Viejo Inc. earns $600,000 and pays cash dividends of $150,000 during 2014. Cruz Corporation owns 73,500 of the 210,000 outstanding shares of Viejo. What amount should Cruz show in the investment account at December 31, 2014 if the beginning of the year balance in the account was $40,000?

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

Tempest Co. purchased 60, 6% Urich Company bonds for $60,000 cash. Interest is payable semiannually on July 1 and January 1. If 30 of the securities are sold on July 1 for $32,000, the entry would include a credit to Gain on Sale of Debt Investments for

When a company holds stock of several different corporations, the group of securities is identified as a(n)

A consolidated income statement will reflect only revenue and expense transactions between the consolidated entity and parties outside the affiliated group.

Which of the following would not be reported under "Other Revenues and Gains" on the income statement?

The balance in the Unrealized Gain or Loss-Equity account will

Which of the following is not a true statement about the accounting for debt investments?

A consolidated income statement will show

When debt investments are sold, the gain or loss is the difference between the net proceeds from the sale and the fair value of the bonds.

On January 1, 2014, Lark Corporation purchased 35% of the common stock outstanding of Dinc Corporation for $700,000. During 2014, Dinc Corporation reported net income of $200,000 and paid cash dividends of $100,000. The balance of the Stock Investments-Dinc account on the books of Lark Corporation at December 31, 2014 is

Under the equity method of accounting for long-term investments in common stock, when a dividend is received from the investee company,

Which of the following are accounted for at amortized cost under IFRS?

Under the equity method, the investment in common stock is initially recorded at cost, and the Stock Investments account is adjusted annually.