Question 1

Non-strategic investments are usually:

Accepted Answer

A)  Expected to provide profits through short-term changes in price. 
B)  Subject to frequent buying and selling. 
C)  Expected to be converted into cash within one year. 
D)  Current assets. 
E)  All of these answers are correct. 
A)  Expected to provide profits through short-term changes in price. 
B)  Subject to frequent buying and selling. 
C)  Expected to be converted into cash within one year. 
D)  Current assets. 
E)  All of these answers are correct.

Question 2

The equity method is used in accounting for significant influence investments in associates.

Accepted Answer

A) True 
 B)False

Question 3

Accounting for long-term investments in equity securities with controlling influence uses the:

Accepted Answer

A)  Equity method. 
B)  Investment method. 
C)  Controlling method. 
D)  Consolidation method. 
E)  Investor method. 
A)  Equity method. 
B)  Investment method. 
C)  Controlling method. 
D)  Consolidation method. 
E)  Investor method.

Question 4

Non-strategic investments are of two types: debt and share investments.

Accepted Answer

A) True 
 B)False

Question 5

An investor that significantly influences the operations of an investee should account for the investment using the equity method.

Accepted Answer

A) True 
 B)False

Question 6

Micron purchased 40,000 Martok Corp common shares. This represents 40% of the outstanding shares. The purchase price was $232,000. The entry to record thetransaction includes a:

Accepted Answer

A)  Credit to Investment in Martok Common Shares for $232,000. 
B)  Debit to Investment in Martok Common Shares for $232,000. 
C)  Credit to Investment in Martok Common Shares for $92,800. 
D)  Debit to Investment in Martok Common Shares for $92,800. 
E)  Debit to Investment in Martok Common Shares for $40,000. 
A)  Credit to Investment in Martok Common Shares for $232,000. 
B)  Debit to Investment in Martok Common Shares for $232,000. 
C)  Credit to Investment in Martok Common Shares for $92,800. 
D)  Debit to Investment in Martok Common Shares for $92,800. 
E)  Debit to Investment in Martok Common Shares for $40,000.

Question 7

Non-strategic investments can result in gains or losses for a company.

Accepted Answer

A) True 
 B)False

Question 8

The term "equity security" refers to the guarantee your broker gives you concerning an investment that was just made for you.

Accepted Answer

A) True 
 B)False

Question 9

Micron owns 30% of JVT Corp's common shares and has significant influence over JVT's operations. Micron receives $6,500 in dividends from JVT. The entry to recordreceipt of the dividends includes a debit to Cash for $6,500 and a credit to Investment in JVT Shares for $6,500.

Accepted Answer

A) True 
 B)False

Question 10

A company that owns 100% of the outstanding shares of a subsidiary is required to take over the subsidiary's assets, cancel the subsidiary's shares, and merge the subsidiary into the parent.

Accepted Answer

A) True 
 B)False

Question 11

Receipt of dividends increases the value of a significant influence investment.

Accepted Answer

A) True 
 B)False

Question 12

Investments non-strategic debt investments require the investor to record interest income as it accrues.

Accepted Answer

A) True 
 B)False

Question 13

Non-strategic debt investments are initially recorded using either the fair value through profit or loss method or amortized cost method.

Accepted Answer

A) True 
 B)False

Question 14

Music City paid $37,800 plus a broker's fee of $525 to acquire 8% Airport Corp bonds with a $40,000 maturity value. Music City intends to hold the bonds to maturity. Thejournal entry to record acquisition of the bonds includes a debit to Long-Term Investment in Airport Bonds for:

Accepted Answer

A)  $38,325. 
B)  $37,800. 
C)  $41,525. 
D)  $40,000. 
E)  $40,525. 
A)  $38,325. 
B)  $37,800. 
C)  $41,525. 
D)  $40,000. 
E)  $40,525.

Question 15

IFRS requires the fair value through profit and loss method for:

Accepted Answer

A)  Strategic investments. 
B)  Significant influence investments. 
C)  Non-strategic equity investments. 
D)  Investments in associates. 
A)  Strategic investments. 
B)  Significant influence investments. 
C)  Non-strategic equity investments. 
D)  Investments in associates.

Question 16

The main feature of a non-strategic investment is that the investor's intent is to generate profit primarily through short-term changes in fair value.

Accepted Answer

A) True 
 B)False

Question 17

Identify the reasons) why investments are made in other corporations.

Accepted Answer

A)  To build a favourable business relationship with a major customer or supplier. 
B)  To gain insider information on the corporation. 
C)  To participate in new markets and technologies and to build a favourable business relationship with a major customer or supplier. 
D)  To participate in new markets and technologies. 
E)  None of these answers is correct. 
A)  To build a favourable business relationship with a major customer or supplier. 
B)  To gain insider information on the corporation. 
C)  To participate in new markets and technologies and to build a favourable business relationship with a major customer or supplier. 
D)  To participate in new markets and technologies. 
E)  None of these answers is correct.

Question 18

Tool Co. received cash dividends of $3.5 per share on 300 Sharp Systems Inc. shares. The journal entry to record the transaction is a debit to Cash of $1,050 and a credit to Dividend Income of $1,050.

Accepted Answer

A) True 
 B)False

Question 19

Non-strategic investments are always classified as short-term regardless of how long the investment is planned to be held.

Accepted Answer

A) True 
 B)False

Question 20

The sale of a short-term equity investment includes a debit to:

Accepted Answer

A)  Long-term equity investments. 
B)  Cash. 
C)  Short-term investments. 
D)  Gain on sale of short-term investment. 
E)  All of these answers are correct. 
A)  Long-term equity investments. 
B)  Cash. 
C)  Short-term investments. 
D)  Gain on sale of short-term investment. 
E)  All of these answers are correct.

Non-strategic investments are usually:

The equity method is used in accounting for significant influence investments in associates.

Accounting for long-term investments in equity securities with controlling influence uses the:

Non-strategic investments are of two types: debt and share investments.

An investor that significantly influences the operations of an investee should account for the investment using the equity method.

Micron purchased 40,000 Martok Corp common shares. This represents 40% of the outstanding shares. The purchase price was $232,000. The entry to record thetransaction includes a:

Non-strategic investments can result in gains or losses for a company.

The term "equity security" refers to the guarantee your broker gives you concerning an investment that was just made for you.

Micron owns 30% of JVT Corp's common shares and has significant influence over JVT's operations. Micron receives $6,500 in dividends from JVT. The entry to recordreceipt of the dividends includes a debit to Cash for $6,500 and a credit to Investment in JVT Shares for $6,500.

A company that owns 100% of the outstanding shares of a subsidiary is required to take over the subsidiary's assets, cancel the subsidiary's shares, and merge the subsidiary into the parent.

Receipt of dividends increases the value of a significant influence investment.

Investments non-strategic debt investments require the investor to record interest income as it accrues.

Non-strategic debt investments are initially recorded using either the fair value through profit or loss method or amortized cost method.

Music City paid $37,800 plus a broker's fee of $525 to acquire 8% Airport Corp bonds with a $40,000 maturity value. Music City intends to hold the bonds to maturity. Thejournal entry to record acquisition of the bonds includes a debit to Long-Term Investment in Airport Bonds for:

IFRS requires the fair value through profit and loss method for:

The main feature of a non-strategic investment is that the investor's intent is to generate profit primarily through short-term changes in fair value.

Identify the reasons) why investments are made in other corporations.

Tool Co. received cash dividends of $3.5 per share on 300 Sharp Systems Inc. shares. The journal entry to record the transaction is a debit to Cash of $1,050 and a credit to Dividend Income of $1,050.

Non-strategic investments are always classified as short-term regardless of how long the investment is planned to be held.

The sale of a short-term equity investment includes a debit to:

Property, Plant and Equipment and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters

Exam 15: Accounting for Debt and Share Investments

Non-strategic investments are usually:

The equity method is used in accounting for significant influence investments in associates.

Accounting for long-term investments in equity securities with controlling influence uses the:

Non-strategic investments are of two types: debt and share investments.

An investor that significantly influences the operations of an investee should account for the investment using the equity method.

Micron purchased 40,000 Martok Corp common shares. This represents 40% of the outstanding shares. The purchase price was $232,000. The entry to record thetransaction includes a:

Non-strategic investments can result in gains or losses for a company.

The term "equity security" refers to the guarantee your broker gives you concerning an investment that was just made for you.

Micron owns 30% of JVT Corp's common shares and has significant influence over JVT's operations. Micron receives $6,500 in dividends from JVT. The entry to recordreceipt of the dividends includes a debit to Cash for $6,500 and a credit to Investment in JVT Shares for $6,500.

A company that owns 100% of the outstanding shares of a subsidiary is required to take over the subsidiary's assets, cancel the subsidiary's shares, and merge the subsidiary into the parent.

Receipt of dividends increases the value of a significant influence investment.

Investments non-strategic debt investments require the investor to record interest income as it accrues.

Non-strategic debt investments are initially recorded using either the fair value through profit or loss method or amortized cost method.

Music City paid $37,800 plus a broker's fee of $525 to acquire 8% Airport Corp bonds with a $40,000 maturity value. Music City intends to hold the bonds to maturity. Thejournal entry to record acquisition of the bonds includes a debit to Long-Term Investment in Airport Bonds for:

IFRS requires the fair value through profit and loss method for:

The main feature of a non-strategic investment is that the investor's intent is to generate profit primarily through short-term changes in fair value.

Identify the reasons) why investments are made in other corporations.

Tool Co. received cash dividends of $3.5 per share on 300 Sharp Systems Inc. shares. The journal entry to record the transaction is a debit to Cash of $1,050 and a credit to Dividend Income of $1,050.

Non-strategic investments are always classified as short-term regardless of how long the investment is planned to be held.

The sale of a short-term equity investment includes a debit to:

Property, Plant and Equipment and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters