Question 1

The balance in the OCI account related to the Investment in DEF account immediately prior to the sale of the shares was:

Accepted Answer

A) $11,000 Cr. 
B) $8,000 Cr. 
C) $11,000 Dr. 
D) $8,000 Dr. 
A) $11,000 Cr. 
B) $8,000 Cr. 
C) $11,000 Dr. 
D) $8,000 Dr.

Question 2

Unrealized holding gains flow through income or OCI for FVTOCI investments.

Accepted Answer

A) True 
 B)False

Question 3

Dividends received on an investment in equity shares held as an Investment in Associate causes which of the following effects?

Accepted Answer

A) The investment account is decreased 
B) The valuation account is increased 
C) Income of the investor is increased 
D) The unrealized loss is decreased or the unrealized gain is increased 
A) The investment account is decreased 
B) The valuation account is increased 
C) Income of the investor is increased 
D) The unrealized loss is decreased or the unrealized gain is increased

Question 4

The equity method of accounting for a consolidated company probably will be used when the proportion of its voting shares held is as low as:

Accepted Answer

A) 18 percent. 
B) 20 percent. 
C) 50 percent. 
D) Any percent, as long as there is demonstrated significant influence. 
E) 23 percent. 
A) 18 percent. 
B) 20 percent. 
C) 50 percent. 
D) Any percent, as long as there is demonstrated significant influence. 
E) 23 percent.

Question 5

ZTC purchased shares of W common on the following dates: $\begin{array}{|l|r|}
\hline \text { Purchases } &{\text { Cash }} \
\hline \text { January } 1,500 \text { shares at } \$ 3& \$ 1,500 \
\hline \text { March } 30,200 \text { shares at } \$ 2 & 400 \
\hline \text { June } 20,100 \text { shares at } \$ 5 & 500 \
\hline \text { August } 30,50 \text { shares at } \$ 7 & 350 \
\hline
\end{array}$ The shares were designated FVTPL securities.ZTC then sold 150 of the March 30 shares that were purchased on September 9.The sale price was $7.00 per share.This sale should be recorded as follows (Round your intermediate calculations to two decimal places):

Accepted Answer

A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4 
A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4

Question 6

Masters Inc.acquired 30% of Continental Corp.'s voting shares on January 1,2015 for $100,000.During 2015,Continental earned $40,000 and paid dividends of $25,000.Master's 30% interest in Continental gives Masters the ability to exercise significant influence over Continental's operating and financial policies.During 2016,Continental earned $50,000 and paid dividends of $15,000 on April 1 and $15,000 on October 1.On July 1,2016,Masters sold half of its shares in Continental for $66,000 cash.Assume a December 31 year-end.
Calculate the amount,before income taxes that Masters should include in its 2015 income statement as a result of the investment.

Accepted Answer

2015 Share

Question 7

The intent to control overrides the ability to do so when determining whether control exists (and henceforth consolidation is required).

Accepted Answer

A) True 
 B)False

Question 8

MNO Company purchased 10 $1,000,9 percent bonds on February 28,2014,at 105 plus $300 total accrued interest.MNO intends to sell the bonds to finance office remodelling in 2015.Interest is paid each April 30 and October 31.MNO paid $120 in broker's fees at the date of purchase.MNO's reporting year ends December 31.MNO should report this FVTPL investment on its 2014 balance sheet at:

Accepted Answer

A) $10,500 
B) $10,620 
C) $10,800 
D) $10,920 
A) $10,500 
B) $10,620 
C) $10,800 
D) $10,920

Question 9

Under ASPE,management may choose to account for any strategic investments using either the cost or equity methods.

Accepted Answer

A) True 
 B)False

Question 10

The balance in Investment in DEF account on December 31st,2015 was:

Accepted Answer

A) Nil. 
B) $30,000. 
C) $27,500. 
D) $25,000. 
A) Nil. 
B) $30,000. 
C) $27,500. 
D) $25,000.

Question 11

There is no separate impairment test for FVTPL investments.

Accepted Answer

A) True 
 B)False

Question 12

On January 1st,2011,ABC Inc.purchased a $1,000 bond which pays interest semi-annually on June 30th and December 31st each year at the stated rate of 8% per annum.The market rate was 6% on January 1st,2011.The bond matures on December 31st,2015.There is no active market for the bond,so ABC will account or it using the amortized cost method.
Required:
a) How much was the bond purchased for (ignore brokerage fees)?
b) Provide all required journal entries for 2011.

Accepted Answer

a) Present Value of Bond on Ja

Question 13

(a) A company purchased a $20,000,9 percent (payable annually on each June 30),bond on 10/31 2002.Give the entry to record this transaction,assuming purchase at par plus any accrued interest.The bond is accounted for using the cost method.
(b) Give the adjusting entry (if any) that should be made on December 31,2012,end of the accounting period.

Accepted Answer

The answer of (a) A company purchased a $20,000,9 percent...

Question 14

In a lump-sum purchase of the shares of two or more companies,their relative par values are used as the basis of the allocation of cost to each.

Accepted Answer

A) True 
 B)False

Question 15

When an investor uses the equity method to account for investments in common stock,cash dividends received by the investor from the investee should be recorded as:

Accepted Answer

A) Dividend income. 
B) A deduction from the investor's share of the investee's profits. 
C) A deduction from the investment account. 
D) A deduction from the stockholders' equity account, dividends to shareholders. 
A) Dividend income. 
B) A deduction from the investor's share of the investee's profits. 
C) A deduction from the investment account. 
D) A deduction from the stockholders' equity account, dividends to shareholders.

Question 16

List 3 factors that exhibit evidence of the existence of significant influence.

Accepted Answer

An ownership interest of between 20% and

Question 17

On January 1st,2011,ABC Inc.purchased a $2,000 bond which pays interest semi-annually on June 30th and December 31st each year at the stated rate of 8% per annum.The market rate was 6% on January 1st,2011.The bond matures on December 31st,2015.There is no active market for the bond,so ABC will account or it using the amortized cost method.
Required:
a) How much was the bond purchased for (ignore brokerage fees)?
b) Provide all required journal entries for 2011.

Accepted Answer

a) Present Value of Bond on Ja

Question 18

On January 1,2014,XYC purchased 100 shares (1 percent) of AB common shares at $120 per share.XYC uses the cost method to account for the AB shares.Subsequent to purchase,the following transactions and events happened: June 1,2014,received a 20 percent stock dividend on the AB shares; March 31,2015,XYC sold half of the AB shares at $108 per share.At the date of the sale,XYC should recognize a gain (loss) on the sale of the AB shares of:

Accepted Answer

A) $600 loss. 
B) $220 gain. 
C) $480 gain. 
D) $880 gain. 
A) $600 loss. 
B) $220 gain. 
C) $480 gain. 
D) $880 gain.

Question 19

A change from the equity method to the cost method is a prospective accounting change.

Accepted Answer

A) True 
 B)False

Question 20

When 30% of another company's common shares are purchased for a price in excess of 30% of the market value of its net assets,why is the excess of market value of assets over its book value amortized by the investor over its remaining useful life?

Accepted Answer

A) That part of the investment is overstated in value at acquisition date. 
B) The investee's income is understated with respect to the price paid by the investor for the shares. 
C) The investee's income is overstated with respect to the price paid by the investor for the shares. 
D) To correct errors in the investee's accounting. 
A) That part of the investment is overstated in value at acquisition date. 
B) The investee's income is understated with respect to the price paid by the investor for the shares. 
C) The investee's income is overstated with respect to the price paid by the investor for the shares. 
D) To correct errors in the investee's accounting.

The balance in the OCI account related to the Investment in DEF account immediately prior to the sale of the shares was:

Unrealized holding gains flow through income or OCI for FVTOCI investments.

Dividends received on an investment in equity shares held as an Investment in Associate causes which of the following effects?

The equity method of accounting for a consolidated company probably will be used when the proportion of its voting shares held is as low as:

The intent to control overrides the ability to do so when determining whether control exists (and henceforth consolidation is required).

Under ASPE,management may choose to account for any strategic investments using either the cost or equity methods.

The balance in Investment in DEF account on December 31^st,2015 was:

There is no separate impairment test for FVTPL investments.

In a lump-sum purchase of the shares of two or more companies,their relative par values are used as the basis of the allocation of cost to each.

When an investor uses the equity method to account for investments in common stock,cash dividends received by the investor from the investee should be recorded as:

List 3 factors that exhibit evidence of the existence of significant influence.

A change from the equity method to the cost method is a prospective accounting change.

When 30% of another company's common shares are purchased for a price in excess of 30% of the market value of its net assets,why is the excess of market value of assets over its book value amortized by the investor over its remaining useful life?

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Filters

Exam 11: Financial Instruments: Investments in Debt and Equity Securities

The balance in the OCI account related to the Investment in DEF account immediately prior to the sale of the shares was:

Unrealized holding gains flow through income or OCI for FVTOCI investments.

Dividends received on an investment in equity shares held as an Investment in Associate causes which of the following effects?

The equity method of accounting for a consolidated company probably will be used when the proportion of its voting shares held is as low as:

The intent to control overrides the ability to do so when determining whether control exists (and henceforth consolidation is required).

Under ASPE,management may choose to account for any strategic investments using either the cost or equity methods.

The balance in Investment in DEF account on December 31st,2015 was:

There is no separate impairment test for FVTPL investments.

In a lump-sum purchase of the shares of two or more companies,their relative par values are used as the basis of the allocation of cost to each.

When an investor uses the equity method to account for investments in common stock,cash dividends received by the investor from the investee should be recorded as:

List 3 factors that exhibit evidence of the existence of significant influence.

A change from the equity method to the cost method is a prospective accounting change.

When 30% of another company's common shares are purchased for a price in excess of 30% of the market value of its net assets,why is the excess of market value of assets over its book value amortized by the investor over its remaining useful life?

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Filters

The balance in Investment in DEF account on December 31^st,2015 was: