Exam 13: Investments and Long-Term Receivables

In its first year of operations, Roger Company purchased trading securities at a total cost of $53,000. On December 31, the end of Roger's fiscal year, the fair market value of those investments totaled $57,000. As a result of these investments, Roger Company will report

Define a long-term fund and list the three most common long-term funds that a company would report as investments on its balance sheet.

Significant influence of another company generally occurs when the investor owns between 25% and 45%. Due to this relationship the investor is required to issue consolidated financial statements.

A note receivable should always be recorded at its present value using the borrower's incremental interest rate.

On July 1, 2017, James Company purchased Timothy Company's six-year 9% bonds with a face value of $200,000 for $196,000, which included $6,000 of accrued interest. The bonds, which mature on March 1, 2023, are to be held- to-maturity and pay interest semiannually on March 1 and September 1. James uses the straight-line method of amortization. The amount of income James should report for the calendar year 2017 as a result of this investment would be

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

On July 1, Sleepy, Inc. purchased 100 of Rabbit Co.'s 6%, $1,000 bonds. The bonds, which pay interest on March 1 and September 1, were purchased at 102 plus accrued interest to yield 4%. The investment was classified as held- to-maturity securities. Effective interest amortization is used. Required: Prepare journal entries for a. July 1 b. September 1 c. December 31

The generally accepted accounting principles for trading securities include all of the following except

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

During January 2017, Long Corporation for the first time decided to acquire some equity securities as a means of putting some of its idle cash to work. The securities are classified as trading securities. At March 31, when Long prepares its first quarter financial statements, the following information about the acquired securities is available: Required: a. Prepare the journal entries to record the acquisition in January and valuation at the end of the first quarter of 2017. b. Assume that on June 30, 2017, the company still has this same portfolio. The market value of 1 is $57,000, 2 is $30,000, and 3 is $31,000. What journal entry, if any, should be prepared at the end of the second quarter? c. On August 15, 2017, Long Corporation sold Security 3 for $33,000. Prepare the journal entry to record this transaction.

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

What three steps are necessary to evaluate whether or not an investment is impaired?

Which of the following methods of accounting for investments is appropriate when the investor controls the investee?

A transfer of a security between categories is accounted for at the

In order to classify an investment as held-to-maturity, the company has to have the ability and the intent to hold the investment until it matures.