Exam 13: Investments and Fair Value Accounting

Which of the following would be considered an "Other Comprehensive Income" item?

Journalize the entries to record the following selected transactions of Oliver Co.:

The equity method of accounting for investments

Zach Company owns 40% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $20,000 net loss. Zach Corporation's entry would include a

Long-term investments are held for all of the listed reasons below except

Under the equity method, the receipt of cash dividends on an investment in common stock of Vallerio Corporation is accounted for as a debit to Cash and a credit to

If one company owns more than 50% of the common stock of another company

On May 1, 2011, Stanton Company purchased $50,000 of Harris Company's 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stanton received its first semiannual interest. On February 1, 2012, Stanton sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Stanton will record on June 30, 2011, will include:

Unrealized gains and losses on trading securities are not included in the calculation of net income.

Which one of the following items below would not affect the investor's income for the period?

Fair value accounting is used more under Generally Accepted Accounting Principles (GAAP) than it is under International Financial Reporting Standards (IRFS).

(1) Discuss factors contributing to the trend to fair value accounting. (2) What are some of the disadvantages associated with using fair value?

On January 1, 2011, Blanton Company's Valuation Allowance for Trading Investments account has a debit balance of $22,500. On December 31, 2011, the cost of the trading securities portfolio was $80,000. The fair value was $98,000. Which of the following would Blanton report on the income statement for 2011?

The amount of interest paid when buying a bond as an investment should be credited to Interest Revenue.

The account Unrealized Gain (Loss) on Available-For-Sale Securities should be included in the

An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?

Which of the following is not a part of comprehensive income?

Define (1) debt securities and (2) equity securities. Include their similarities and differences in your discussion.

Generally accepted accounting principles (GAAP) require the use of fair value accounting for all assets and liabilities.

The cumulative effects of other comprehensive income items must be reported separately from retained earnings and paid-in capital, on the balance sheet, as accumulated other comprehensive income.