Exam 15: Investments

Realized gains or losses on available-for-sale debt investments represent the difference between the ________.

When a company collects the face value of a bond investment at maturity,total assets increase.

Under the equity method,the investor ________.

________ are equity securities in which the investor owns between 20% and 50% of the investee's voting stock.

Equity securities in which the investor owns less than 20% ownership in the voting stock of the investee generally can be classified as ________ equity investments.

Long-term investments ________.

The rate of return on total assets measures a company's ________.

If a held-to-maturity debt security is purchased at a discount,the discount must be amortized when the interest revenue is earned.

Significant influence equity investments must be accounted for using the ________ method.

Debt securities do not include U.S.government securities.

For available-for-sale debt investments,state: • Reporting method used • How unrealized holding gain or loss is reported • Balance sheet effects • Income statement effects Available-for-Sale Debt Rvestments: Reporting method used How unrealized holding gain or oss is reported Balance sheet effects Income statement effects

On May 18,2018,Fran Co.invested excess cash of $50,000 by purchasing bonds of Hans Inc.At year-end,December 31,2018,the market price of the bonds was $52,000.The investment is categorized as a trading debt investment.Journalize the adjusting entry needed at December 31,2018.Omit explanation.

Hardin Co.purchased $1,000,000 of 4% bonds of Westin Co.at face value on January 1,2018.The bonds pay interest on June 30 and December 31 each year.They mature on December 31,2022.Hardin intends to hold the Westin bond investment until maturity and has the ability to do so. Requirements: 1.Journalize Hardin's transactions related to the bonds for 2018.Omit explanations. 2.Journalize the entry that Hardin will make on the maturity date of the Westin Co.bonds.Assume the last interest payment has already been recorded.Omit explanations.

Amex Corporation invests excess cash to purchase $25,000 in corporate bonds on March 30,2018.In addition to the $25,000,Amex also paid a brokerage fee of $1,000.Amex intends to hold the bonds until maturity and has the ability to do so.When the bonds mature on March 30,2020,Amex plans to use the cash for its business expansion.Which of the following is included in the journal entry on March 30,2018?

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

An equity security represents a credit relationship with another company or governmental entity.

A(n)________ is an example of equity securities.

In considering whether a company should invest in debt or equity securities of another company,which of the following statements is incorrect?

When a trading debt security is disposed of,the amount of gain or loss is calculated as the difference between the cash received and the cost of the debt security disposed of.

Consolidated statements combine the balance sheets,income statements,and statement of cash flows of the parent company with those of its controlling interest affiliates.