Exam 15: Investments and International Operations

On February 15,Seacroft buys 7,000 shares of Kebo common stock at $28.53 per share plus a brokerage fee of $400.The stock is classified as available-for-sale securities.On March 15,Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15.Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250.The fair value of the remaining shares is $29.50 per share.The amount that Seacroft should report on its year-end December 31 income statement related to the investment in Kebo is:

Equity securities reflect a creditor relationship such as investments in notes,bonds,and certificates of deposit.

A controlling influence over the investee is based on the investor owning voting stock exceeding:

Six months ago,a company purchased an investment in stock for $65,000.The investment is classified as available-for-sale securities.The current fair value of the stock is $68,500.The company should record a:

Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

Any cash dividends received from equity securities are recorded as Dividend Expense.

Long-term investments include:

A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value.The company intends to hold the bonds to maturity.The cash proceeds the company will receive when the bonds mature equal:

What is comprehensive income and how is it usually reported in the financial statements?

When an equity security is sold,the sale proceeds are compared with the cost,and if the cost is greater than the proceeds,a gain on the sale of the security is recorded.

Foreign exchange rates fluctuate due to many factors including changing political and economic conditions.

Explain how equity securities having significant influence are accounted for and reported in the financial statements.Include a discussion of the criterion for these securities in terms of an investee's voting stock.

All of the following statements regarding accounting for trading securities under U.S.GAAP are true except:

Clarity Corporation had the following transactions involving investments in trading securities during the year.Prior to these transactions,Clarity had never had any investments in trading securities.Prepare the required general journal entries to record these transactions.

Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value.Interest payments are made semiannually.Seamark plans to hold the bonds for the five year life.The journal entry to record the purchase should include:

Comprehensive income includes:

Define the return on total assets and explain how it is used to measure a company's financial performance.

On November 12,Kendra,Inc.,a U.S.Company,sold merchandise on credit to Nakakura Company of Japan at a price of 1,500,000 yen.The exchange rate was $0.00837 per yen on the date of sale.On December 31,when Kendra prepared its financial statements,the exchange rate was $0.00843.Nakakura Company paid in full on January 12,when the exchange rate was $0.00861.On December 31,Kendra should prepare the following journal entry:

On May 1 of the current year,a company paid $200,000 to purchase 8%,10-year bonds with a par value of $200,000; interest is paid semiannually on March 1 and September 1.The company intends to hold the bonds until they mature.Prepare the journal entries to record (1)the bond purchase,(2)the receipt of the first semiannual interest payment on September 1 of the current year,(3)the accrual of interest for year-end December 31,and (4)the receipt of the second semiannual payment on May 1.

Short-term investments: