Exam 16: Accounting for Debt and Share Investments

World Co.paid $25,000 to buy 10% Core Power bonds payable.The bonds pay semi-annual interest on June 30^th and December 31^st.World Co.paid $100 commission.World Co.intends to hold these bonds for 9 months and then trade them.The entry to record this purchase is:

Free

(Multiple Choice)

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(70)

Question 1

Correct Answer:

Verified

The method used to account for non-strategic investments is the:

Free

(Multiple Choice)

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Question 2

Correct Answer:

Verified

Investments non-strategic debt investments require the investor to record interest revenue as it accrues.

Free

(True/False)

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Question 3

Correct Answer:

Verified

True

Music City paid $37,800 plus a broker's fee of $525 to acquire 8% Airport Corp bonds with a $40,000 maturity value.Music City intends to hold the bonds to maturity.The journal entry to record acquisition of the bonds includes a debit to Long-Term Investment in Airport Bonds for:

(Multiple Choice)

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Question 4

On October 31,Classical City received dividends of $0.23 per share from its short-term Investment in 500 Violin Corp.common shares.Classical City had no significant influence on Violin Corp.Prepare the journal entry to record the receipt of the dividends.

(Essay)

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Question 5

When a company purchases the shares of another company with the goal of participating in new markets or technologies,they are considered non-strategic investors.

(True/False)

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Question 6

A controlling influence over the investee is based on the investor owning voting shares exceeding:

(Multiple Choice)

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Question 7

On January 1,Year 1,Froelich Corporation purchased 5,500 shares of SportTech Ltd.as a long-term investment for a total of $206,195.The 5,500 shares represented 30% of the outstanding shares of SportTech.At the end of Year 1,SportTech reported a loss of $66,000 for the year.In Year 2,Froelich had the following long-term investment transactions.Assume Froelich owns 25% of SportTech at December 31,Year 2.Prepare the journal entries to record the transactions for Year 2.

(Essay)

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Question 8

Prepare general journal entries for the following transactions involving short-term securities (assume no investments were held prior to the following transactions): (a)Feb 16: Purchased 500 City Corp shares at $35 per share.Commission was $30. (b)Feb 26: Purchased 800 Southside Corp shares at $25 per share,no commission. (c)Mar 2: Received a $4 per share dividend on the City Corp shares. (d)Mar 28: Sold 150 shares of City Corp at $40 per share. (e)April 20: Sold 250 shares of Southside Corp at $20 per share. (f)April 30: End of the quarter.The company is preparing quarterly statements.Fair values for securities are as follows: City Corp $42 per share,and Southside Corp $21 per share.

(Essay)

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Question 9

A decrease in the fair value of a security that has not yet been confirmed by the sale of the security is called a(n):

(Multiple Choice)

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Question 10

Non-strategic investments are usually held as an investment of cash for use in current operations.

(True/False)

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Question 11

Investments in short-term equity securities are always _ and are reported as ___.

(Short Answer)

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Question 12

On December 31,Cast Corporation had the following non-strategic short-term equity investments.Prepare the appropriate adjusting entry.

(Essay)

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Question 13

Significant influence investments:

(Multiple Choice)

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Question 14

Prepare general journal entries to record the following transactions for The Chocolate Factory in its first year of operations: (a)On May 4,as a short term investment,purchased 500 shares of Power Corp.,paying a $500 brokerage fee. (b)On July 1,received $2.00 per share cash dividend on the Power Corp.shares. (c)On September 15,sold 300 Power Corp.shares for $120 per share,incurring a $500 brokerage fee. (d)The December 31 fair value of the company's short term investmentin Power Corp revealed a $2,000 unrealized gain.

(Essay)

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Question 15

Purchases of long-term debt investments are never initially recorded at fair value.

(True/False)

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Question 16

Accounting for long-term investments in equity securities with controlling influence uses the:

(Multiple Choice)

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Question 17

Proportionate consolidation combines the financial statement of an investor and a joint operation enterprise based on the investors proportionate share of the joint operations.

(True/False)

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Question 18

On May 15,Kingswood Company purchased 30% worth of Pineview Ltd's common shares as a significant influence investment.On September 30,Pineview announced that net income for the year amounted to $650,000.Kingswood should record a debit to Investment in Pineview Common Shares of $195,000 and a credit to Earnings from Investment in Pineview of $195,000.

(True/False)

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Question 19

Non-strategic investments can result in gains or losses for a company.

(True/False)

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Question 20

Showing 1 - 20 of 134

World Co.paid $25,000 to buy 10% Core Power bonds payable.The bonds pay semi-annual interest on June 30^th and December 31^st.World Co.paid $100 commission.World Co.intends to hold these bonds for 9 months and then trade them.The entry to record this purchase is:

The method used to account for non-strategic investments is the:

Investments non-strategic debt investments require the investor to record interest revenue as it accrues.

Music City paid $37,800 plus a broker's fee of $525 to acquire 8% Airport Corp bonds with a $40,000 maturity value.Music City intends to hold the bonds to maturity.The journal entry to record acquisition of the bonds includes a debit to Long-Term Investment in Airport Bonds for:

On October 31,Classical City received dividends of $0.23 per share from its short-term Investment in 500 Violin Corp.common shares.Classical City had no significant influence on Violin Corp.Prepare the journal entry to record the receipt of the dividends.

When a company purchases the shares of another company with the goal of participating in new markets or technologies,they are considered non-strategic investors.

A controlling influence over the investee is based on the investor owning voting shares exceeding:

A decrease in the fair value of a security that has not yet been confirmed by the sale of the security is called a(n):

Non-strategic investments are usually held as an investment of cash for use in current operations.

Investments in short-term equity securities are always _ and are reported as ___.

On December 31,Cast Corporation had the following non-strategic short-term equity investments.Prepare the appropriate adjusting entry.

Significant influence investments:

Purchases of long-term debt investments are never initially recorded at fair value.

Accounting for long-term investments in equity securities with controlling influence uses the:

Proportionate consolidation combines the financial statement of an investor and a joint operation enterprise based on the investors proportionate share of the joint operations.

Non-strategic investments can result in gains or losses for a company.

Property,plant and Equipment,and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income,earnings Per Share,and Retained Earnings

Bonds and Long-Term Notes Payable

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters

Exam 16: Accounting for Debt and Share Investments

World Co.paid $25,000 to buy 10% Core Power bonds payable.The bonds pay semi-annual interest on June 30th and December 31st.World Co.paid $100 commission.World Co.intends to hold these bonds for 9 months and then trade them.The entry to record this purchase is:

The method used to account for non-strategic investments is the:

Investments non-strategic debt investments require the investor to record interest revenue as it accrues.

Music City paid $37,800 plus a broker's fee of $525 to acquire 8% Airport Corp bonds with a $40,000 maturity value.Music City intends to hold the bonds to maturity.The journal entry to record acquisition of the bonds includes a debit to Long-Term Investment in Airport Bonds for:

On October 31,Classical City received dividends of $0.23 per share from its short-term Investment in 500 Violin Corp.common shares.Classical City had no significant influence on Violin Corp.Prepare the journal entry to record the receipt of the dividends.

When a company purchases the shares of another company with the goal of participating in new markets or technologies,they are considered non-strategic investors.

A controlling influence over the investee is based on the investor owning voting shares exceeding:

A decrease in the fair value of a security that has not yet been confirmed by the sale of the security is called a(n):

Non-strategic investments are usually held as an investment of cash for use in current operations.

Investments in short-term equity securities are always _____________ and are reported as _______________.

On December 31,Cast Corporation had the following non-strategic short-term equity investments.Prepare the appropriate adjusting entry.

Significant influence investments:

Purchases of long-term debt investments are never initially recorded at fair value.

Accounting for long-term investments in equity securities with controlling influence uses the:

Proportionate consolidation combines the financial statement of an investor and a joint operation enterprise based on the investors proportionate share of the joint operations.

Non-strategic investments can result in gains or losses for a company.

Property,plant and Equipment,and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Income,earnings Per Share,and Retained Earnings

Bonds and Long-Term Notes Payable

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters

World Co.paid $25,000 to buy 10% Core Power bonds payable.The bonds pay semi-annual interest on June 30^th and December 31^st.World Co.paid $100 commission.World Co.intends to hold these bonds for 9 months and then trade them.The entry to record this purchase is:

Investments in short-term equity securities are always _ and are reported as ___.