Question 1

Investments in associates are classified as

Accepted Answer

A)  Fair value through profit an loss 
B)  Current assets 
C)  Shareholders' equity 
D)  Noncurrent assets 
A)  Fair value through profit an loss 
B)  Current assets 
C)  Shareholders' equity 
D)  Noncurrent assets

Question 2

"Debt investment" and "debt security" are interchangeable terms.

Accepted Answer

A) True 
 B)False

Question 3

Micron owns 40% of the outstanding Martok Corp common shares. Martok paid$97,000 in total cash dividends to its shareholders. Micron's entry to record the transaction should include a:

Accepted Answer

A)  Credit to Investment in Martok Common Shares for $38,800. 
B)  Debit to Dividends for $38,800. 
C)  Debit to investment in Martok Common Shares for $97,000. 
D)  Debit to Dividends for $97,000. 
E)  Debit to Cash for $97,000. 
A)  Credit to Investment in Martok Common Shares for $38,800. 
B)  Debit to Dividends for $38,800. 
C)  Debit to investment in Martok Common Shares for $97,000. 
D)  Debit to Dividends for $97,000. 
E)  Debit to Cash for $97,000.

Question 4

Non-strategic investments that are intended to be held longer than one year are reported on the balance sheet in the:

Accepted Answer

A)  Plant and equipment section. 
B)  Same section as held-for-trading investments. 
C)  Current asset section. 
D)  Intangible asset section. 
E)  Non-current section called long-term investments. 
A)  Plant and equipment section. 
B)  Same section as held-for-trading investments. 
C)  Current asset section. 
D)  Intangible asset section. 
E)  Non-current section called long-term investments.

Question 5

Debt investments:

Accepted Answer

A)  Reflect an ownership relationship. 
B)  Are cash equivalents. 
C)  Are usually accounted for using the amortized cost method. 
D)  Are cash equivalents and reflect a creditor relationship. 
E)  Can be converted to cash within 3 months or less. 
A)  Reflect an ownership relationship. 
B)  Are cash equivalents. 
C)  Are usually accounted for using the amortized cost method. 
D)  Are cash equivalents and reflect a creditor relationship. 
E)  Can be converted to cash within 3 months or less.

Question 6

The balance in the "Investment Income" account on Ildiko's Income Statement for the year ended December 31, 2017 is:

Accepted Answer

A)  $29,750 
B)  $60,000 
C)  $5,250 
D)  $43,750 
E)  None of the above 
A)  $29,750 
B)  $60,000 
C)  $5,250 
D)  $43,750 
E)  None of the above

Question 7

On January 1, 2015, Parris Corporation purchased 75% of Samitz Corporation for$100,000. On November 17, 2015, Samitz Corporation declared total dividends of$12,000. At year-end, Samitz Corporation reported profit of $60,000. The balance in the Parris Corporation's Investment in Samitz Corporation at December 31, 2015 should be:

Accepted Answer

A)  $91,000. 
B)  $148,000. 
C)  $100,000. 
D)  $109,000. 
E)  $136,000. 
A)  $91,000. 
B)  $148,000. 
C)  $100,000. 
D)  $109,000. 
E)  $136,000.

Question 8

On May 15, Kingswood Company purchased 30% worth of Pineview Ltd.'s common shares as a significant influence investment. On September 30, Pineview announced that profit for the year amounted to $650,000. Kingswood should record a debit toInvestment in Pineview Common Shares of $195,000 and a credit to Earnings from Investment in Pineview of $195,000.

Accepted Answer

A) True 
 B)False

Question 9

The sale of a short-term equity investment requires a debit to cash and a credit toshort-term investments, with any resulting differences recognized as gains or losses.

Accepted Answer

A) True 
 B)False

Question 10

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. The proceeds Music City receives at maturity will be:

Accepted Answer

A)  $40,525. 
B)  $37,800. 
C)  $38,325. 
D)  $40,000. 
E)  $43,200. 
A)  $40,525. 
B)  $37,800. 
C)  $38,325. 
D)  $40,000. 
E)  $43,200.

Question 11

You have just purchased some shares in a Canadian public company. Your friends call you an "investee." You are surprised that they got it wrong: you are an investor.

Accepted Answer

A) True 
 B)False

Question 12

Consolidated statements are prepared as if a company is organized as one entity, with the amounts allocated for subsidiaries reported in the investment accounts.

Accepted Answer

A) True 
 B)False

Question 13

Non-strategic equity investments securities are equity securities that the company has the intent and ability to hold until maturity.

Accepted Answer

A) True 
 B)False

Question 14

Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or current asset.

Accepted Answer

A) True 
 B)False

Question 15

After initial recognition, using ASPE, an entity should measure debt securities at:

Accepted Answer

A)  Future cash flows. 
B)  Present value. 
C)  Fair value through profit and loss. 
D)  Amortized cost. 
E)  Cost. 
A)  Future cash flows. 
B)  Present value. 
C)  Fair value through profit and loss. 
D)  Amortized cost. 
E)  Cost.

Question 16

Investments are often made by companies with excess cash hoping to earn a higher return than might be realized by holding cash in the bank.

Accepted Answer

A) True 
 B)False

Question 17

On January 1, X Corporation purchased 80% of Y Corporation for $250,000. On May 20, Y Corporation declared total dividends of $30,000. At year-end Y Corporationreported profit of $150,000. The balance in X Corporation's Investment in Y Corporation account at December 31 should be:

Accepted Answer

A)  $370,000. 
B)  $226,000. 
C)  $346,000. 
D)  $220,000. 
E)  $250,000. 
A)  $370,000. 
B)  $226,000. 
C)  $346,000. 
D)  $220,000. 
E)  $250,000.

Question 18

Non-strategic investments usually:

Accepted Answer

A)  Are purchased for the short-term. 
B)  Include bonds intended to be held-to-maturity. 
C)  Include shares not intended to be converted into cash and include bonds intended to be held-to-maturity. 
D)  Include investments in associates. 
E)  Include shares not intended to be converted into cash. 
A)  Are purchased for the short-term. 
B)  Include bonds intended to be held-to-maturity. 
C)  Include shares not intended to be converted into cash and include bonds intended to be held-to-maturity. 
D)  Include investments in associates. 
E)  Include shares not intended to be converted into cash.

Question 19

Strategic investments:

Accepted Answer

A)  Have significant influence or control over the investee. 
B)  Are business combinations. 
C)  Are joint arrangements. 
D)  Are investments in associates. 
E)  All of these answers are correct. 
A)  Have significant influence or control over the investee. 
B)  Are business combinations. 
C)  Are joint arrangements. 
D)  Are investments in associates. 
E)  All of these answers are correct.

Question 20

You are referred to as an investor when you:

Accepted Answer

A)  Both purchase shares and purchase bonds of a company. 
B)  Issue shares of a company. 
C)  Purchase bonds of a company. 
D)  Issue bonds of a company. 
E)  Purchase shares of company. 
A)  Both purchase shares and purchase bonds of a company. 
B)  Issue shares of a company. 
C)  Purchase bonds of a company. 
D)  Issue bonds of a company. 
E)  Purchase shares of company.

Investments in associates are classified as

"Debt investment" and "debt security" are interchangeable terms.

Micron owns 40% of the outstanding Martok Corp common shares. Martok paid$97,000 in total cash dividends to its shareholders. Micron's entry to record the transaction should include a:

Non-strategic investments that are intended to be held longer than one year are reported on the balance sheet in the:

Debt investments:

The balance in the "Investment Income" account on Ildiko's Income Statement for the year ended December 31, 2017 is:

The sale of a short-term equity investment requires a debit to cash and a credit toshort-term investments, with any resulting differences recognized as gains or losses.

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. The proceeds Music City receives at maturity will be:

You have just purchased some shares in a Canadian public company. Your friends call you an "investee." You are surprised that they got it wrong: you are an investor.

Consolidated statements are prepared as if a company is organized as one entity, with the amounts allocated for subsidiaries reported in the investment accounts.

Non-strategic equity investments securities are equity securities that the company has the intent and ability to hold until maturity.

Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or current asset.

After initial recognition, using ASPE, an entity should measure debt securities at:

Investments are often made by companies with excess cash hoping to earn a higher return than might be realized by holding cash in the bank.

On January 1, X Corporation purchased 80% of Y Corporation for $250,000. On May 20, Y Corporation declared total dividends of $30,000. At year-end Y Corporationreported profit of $150,000. The balance in X Corporation's Investment in Y Corporation account at December 31 should be:

Non-strategic investments usually:

Strategic investments:

You are referred to as an investor when you:

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

Investments in associates are classified as

"Debt investment" and "debt security" are interchangeable terms.

Micron owns 40% of the outstanding Martok Corp common shares. Martok paid$97,000 in total cash dividends to its shareholders. Micron's entry to record the transaction should include a:

Non-strategic investments that are intended to be held longer than one year are reported on the balance sheet in the:

Debt investments:

The balance in the "Investment Income" account on Ildiko's Income Statement for the year ended December 31, 2017 is:

The sale of a short-term equity investment requires a debit to cash and a credit toshort-term investments, with any resulting differences recognized as gains or losses.

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. The proceeds Music City receives at maturity will be:

You have just purchased some shares in a Canadian public company. Your friends call you an "investee." You are surprised that they got it wrong: you are an investor.

Consolidated statements are prepared as if a company is organized as one entity, with the amounts allocated for subsidiaries reported in the investment accounts.

Non-strategic equity investments securities are equity securities that the company has the intent and ability to hold until maturity.

Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or current asset.

After initial recognition, using ASPE, an entity should measure debt securities at:

Investments are often made by companies with excess cash hoping to earn a higher return than might be realized by holding cash in the bank.

On January 1, X Corporation purchased 80% of Y Corporation for $250,000. On May 20, Y Corporation declared total dividends of $30,000. At year-end Y Corporationreported profit of $150,000. The balance in X Corporation's Investment in Y Corporation account at December 31 should be:

Non-strategic investments usually:

Strategic investments:

You are referred to as an investor when you:

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