Exam 15: Investments and Fair Value Accounting

If the proceeds from the sale of bond investments exceeds the carrying amount of the bonds, a gain is realized.

Investments in stocks that are expected to be held for the long term are listed in the stockholder's equity section of the balance sheet.

In general, consolidated financial statements should be prepared

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

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

Investments in bonds that management intends to hold to maturity are called trading securities.

The account Valuation Allowance for Trading Securities is found on the:

The equity method of accounting for investments

The financial statements resulting from combining parent and subsidiary statements are called consolidated statements.

On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, Manus Corporation 8% bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when receiving its semiannual interest on March 1, 2013?

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

Comprehensive income is all changes in stockholders' equity during the period except those resulting from dividends and stockholders' investments.

Blanton Corporation purchased 35% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the dividends it receives from Worton Corporation?

Investment in certificates of deposit and other securities that do not change in value are reported in the balance sheet as:

The equity method causes the investment account to mirror the proportional changes in book value of the investee.

A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share. The market value of the stock is $16 per share. The company's dividend yield is:

The company whose more than 50% stock is owned by the another company is called the

On February 12, Addison, Inc. purchased 6,000 shares of Lucas Company at $22 per share plus a $240 brokerage fee. On August 22, Lucas paid a $0.42 dividend per share. On November 10, 4,000 shares of Lucas stock were sold for $28 per share less a $160 brokerage fee. The journal entry for the sale would include:

The corporation owning all or a majority of the voting stock of another corporation is known as the parent company.

Zach Company owns 45% 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 Company's entry would include a