Exam 18: Investing Assets

Leotis Asset Management invested in the bonds of DEF Co.on 1/1/16.Leotis intends to hold the bonds until maturity.These 5-year bonds had a face vale of $300,000,pay 5% interest on 6/30 and 12/31 of each year,and were issued when the market rate of interest was 6%,resulting in a cost of $287,205.Which of the following is the correct journal entry to record the receipt of the interest payment on 6/30/16?

How are equity method investment disclosures different for IFRS companies than for U.S.GAAP companies?

For Available-for-Sale securities,companies must disclose whether the conversion of convertible securities of the investee would have a significant effect on the reported income from the investment.

HdG,Inc.accepts a $100,000,5% note from Aberdeen Unlimited on 4/1/16.,and lends money to Aberdeen.Aberdeen agrees to pay 5 equal annual payments on this note beginning 3/31/17.The market rate at the date of issuance of this note was 5%.How much Interest Revenue will HdG record on 3/31/17,the first annual installment payment date?

Laurent invested $19,000 in shares of DEF during Year 1,classifying the investment as available-for-sale.The fair value of this investment was $17,500 and $22,000 at the end of Year 1 and Year 2,respectively.What is the unrealized gain or loss for this investment at the end of Year 1 and how is it reported?

Which of the following is not an impairment indicator investment securities?

On January 1 of the current year,Beta Company paid $200,000 for 10,000 shares of Gamma Company common stock.These securities were classified as trading securities.Beta owns 10% of Gamma Company.Gamma reported net income of $65,000 for December 31 of the current year.The fair value of the Gamma stock on that date was $27.What amount will be reported in Beta's balance sheet for the investment in Gamma at December 31?

Texan Textiles invested in two trading securities in December,2017.The following information related to these securities: Record journal entries needed for December relating to these securities.

Realized gains and losses occur when a company holds the securities that experience a change in fair value.

A company can choose the fair value option for reporting some assets,while choosing to report other assets at cost.

If a company elects to use the fair value option at initial recognition,unrealized gains and losses at year-end are reported as part of other comprehensive income.

For Held-to-Maturity Securities,companies must disclose the amortized cost,the aggregate fair value,the the total unrealized gains and losses reported in net income.

Unrealized gains and losses from fair value adjustments for trading equity investments are reported as part of other comprehensive income,while gains and losses from the sale of trading equity investments is reported in net income.

Changes in the fair value of trading debt securities are reported in other comprehensive income.

Which of the following is the primary effect of amortizing a discount on notes receivable?

Refer to Sheppard Corporation.What will be the income statement effect shown on the 2016 income statement?

For equity securities are carried and reported as available for sale,when should a gain be reported on the income statement?

For securities classified as trading,what do companies disclose in the notes to the financial statements?

Both trading securities and held-to-maturity securities are always valued at fair value.

What type of account is Discount on Notes Receivable?