Exam 15: Investments

Wetzel Company has a credit balance of $88,000 in its Allowance to Adjust Long-Term Investments to Market account at the end of the year,before adjustment.Its investment portfolio has a total cost of $600,000 and a market value of $528,000 at December 31,a balance sheet date.The year-end adjustment entry that would be recorded in the books of Wetzel Company is:

Using the cost-adjusted-to-market method of accounting for a long-term investment in stock,the journal entry to record the receipt of dividends involves a debit to Dividend Income.

Eliminations appear on the books of

Giles Company buys 100 percent of the outstanding stock of Henrico Company for $1,300,000.Henrico Company has contributed capital of $840,000 and retained earnings of $360,000.The fair market value of Henrico's identifiable net assets was equal to their book value on the date of acquisition.The consolidated financial statements would contain

Using the journal provided,enter the following transactions for LaPana Corporation for 2012 and 2013.Please provide all explanations.

Distinguish between the financial statement presentation of unrealized gains and losses related to trading securities and the financial statement presentation of unrealized gains and losses related to available-for-sale securities.

Orlov Corporation purchased 8,500 shares of Matsey Corporation common stock for $40 per share on January 1,2012.Matsey reported net income of $120,000 for 2012 and paid dividends of $45,000 during 2012.As of December 31,2012,the market value of Matsey Corporation common stock was $40 per share.Assuming the shares owned by Orlov represent 30 percent of the total outstanding stock of Matsey,Orlov Corporation should report the long-term investment on December 31,2012,at a carrying value of

Wirt Corporation owns 25 percent of the voting stock of Wood Corporation and accounts for the investment using the equity method.Wood reports a net loss of $20,000.Wirt Corporation's entry to record its share of loss is:

The reporting currency is defined as the currency in which the consolidated financial statements are presented.

Discuss the financial statement presentation of the account Allowance to Adjust Short-Term Investments to Market,distinguishing between the effect of a debit balance and the effect of a credit balance in the account.

On January 1,2012,Clark Corporation acquired 90 percent of the common stock of Dot Corporation for $513,000.Dot's stockholders' equity on this date consisted of common stock of $300,000 and retained earnings of $270,000.Prepare the eliminating entry in journal form that would appear on the work sheet for consolidating the balance sheets of the two entities as of the acquisition date.(Omit explanations.)

U.S.Treasury bills are considered debt securities.

All of the following are ways one corporation could affect the operating and financial policies of another corporation except

An individual can be prosecuted by the SEC for insider trading whether or not that individual is employed by the company involved.

When the equity method is used to account for an investment in stock,dividends received by the investor decrease the investment account.

Platek Company buys 100 percent of the stock of Brendel Company for $180,000.Brendel Company has contributed capital of $105,000 and retained earnings of $75,000.The consolidated financial statements would contain

A controlling investment is defined as owning what percent of the stock of another company?

Unrealized gains and losses on available-for-sale securities are reported on the balance sheet.

Match each definition with the correct term below. -Cost-adjusted-to-market method

When are eliminating entries made,where are they entered,and why are they needed?