Exam 15: Investments and International Operations

Chung owns 40% of Lu's ordinary shares. Lu pays $97,000 in total cash dividends to its shareholders. Chung's entry to record this transaction should include a:

All of the following statements regarding equity securities are except:

Explain how equity securities having significant influence are accounted for and reported in the financial statements. Include a discussion of the criterion for these securities in terms of an investee's voting shares.

Explain how available-for-sale securities are accounted for at and after acquisition and how they are reported in financial statements.

Short-term investments are intended to be converted into cash within the longer of one year or the current operating cycle of the business, and are readily convertible to cash.

Six months ago, a company purchased an investment in shares for $65,000. The investment is classified as available-for-sale securities. The current fair value of the shares is $68,500. The company should record a:

A company had a profit margin of 10.5% and total asset turnover of 1.84. Its return on total assets was:

Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value. Interest payments are made semiannually. Seamark plans to hold the bonds for the five year life. The journal entry to record the purchase should include:

Vans purchased 40,000 shares of Skechs ordinary shares for $232,000. This represents 40% of the outstanding shares. The entry to record the transaction includes a:

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Available-for-sale equity securities:

Foreign exchange rates fluctuate due to changes in:

________________________ refers to all changes in equity for a period except for those due to owners' investments and dividends to owners.

Match the following terms with the appropriate definitions.

If the exchange rate for Canadian and U.S. dollars is 0.7382 to 1, this implies that 2 Canadian dollars will buy about1.48 worth of U.S. dollars.

If a U. S. company's credit sale to an international customer allows payment to be made in a foreign currency, the transaction is recorded using the exchange rate on the date of sale.

Multinational corporations can be U.S. companies with operations in other countries.

Texana Inc. imports inventory from Mexico. Prepare the journal entries for Texana to record the following transactions. Include any year-end adjustments.

Doherty Corporation had net income of $30,000, net sales of $1,000,000, and average total assets of $500,000. Its return on total assets is:

On July 31, Beatrice Co. purchased 2,000 shares of SimmTech shares for $16,000. The investment is classified as available-for-sale securities. On October 31, which is Beatrice's year-end, the shares had a fair value of $20,000. Beatrice should record a: