Exam 15: Investments

Jade Investments purchased 40% of the common stock of Ivory Corporation on March 1, 2014. Ivory Corporation reports a net income of $675,000 for the 2015 year. Based on the information provided, which of the following is true of the balance sheet on December 31, 2015?

Which of the following is included in comprehensive income?

Consolidation accounting is the way to combine the financial statements of two or more companies that have the same owners.

Glitter Services pays $1,350,000 to acquire 35% of voting stock of Grey Investments on March 5, 2016. When this transaction is reported in the balance sheet, the:

Held-to-maturity investments are normally reported at ________.

Glitter Services owns 30% of voting stock of Grey Investments. During the year 2015, Grey Investments earned profits of $250,000. Under the equity method, which of the following journal entries will Glitter Services record?

Debra Technologies invested $50,000 to buy $50,000 face value, 8%, five-year in municipal bonds on January 2, 2010. The bonds will mature on January 2, 2015. The bonds pay interest semiannually on January 2 and July 2 every year till maturity. When the company receives interest payments, how will the balance sheet line items be affected?

A ________ is an example of equity securities.

Available-for-sale (AFS)investments are reported as ________ if the business expects to sell them within one year.

Which of the following will be classified as a held-to-maturity investment?

Short-term investments are investments in debt and equity securities that are highly illiquid.

A ________ ownership in the investee's voting stock can significantly influence the investee's decisions.

Angelo Services reported the balance sheet for the year 2014. Based on the following information, calculate the rate of return on total assets of Angelo Services.

Green Services invests its excess cash in Creative Technologies and acquires 1,300 shares for $22.50. Green Services owns less than 1% of Creative's voting stock and plans to hold the stock for two years. Which of the following is the correct journal entry for the transaction?

Interest revenue earned on held-to-maturity investments is reported on the income statement in the ________ section.

Which of the following is true of comprehensive income?

Held-to-maturity investments are categorized as current assets or long-term assets on the balance sheet, depending on the maturity date.

When a company receives a cash dividend on its equity investments, which represents 2% of the investee, its total equity will remain unaffected.

A parent company is a company that:

Greg Financial Services invested $15,000 to acquire 3,750 shares of Mitt Investments on March 15, 2012. This investment represents less than 20% of the investee's voting stock. On May 7, 2016, Greg Financial Services sells 1,750 shares for $12,250. When the transaction is recorded in a journal entry: