Exam 14: Investments in Debt and Equity Securities

Neutron Corporation held the following short-term investments in equity securities classified as trading securities: The valuation account is a net credit of $8,000 at the end of 2014.What was the original cost per share of the C common stock?

On April 1,2014,Ziba Inc.purchased as a temporary investment $100,000,face amount,10% U.S.Treasury notes;they pay interest semiannually on January 1 and July 1.The notes were purchased at 102.Which of the following entries correctly records this purchase?

When an investor purchases sufficient common stock to gain significant influence over the investee,what is the proper accounting treatment of any excess of cost over book value acquired?

The only significant difference between the provisions of international accounting standards as promulgated by IAS 39 and U.S.accounting standards under FASB ASC Topic 860 (Transfers and Servicing is

Changes in fair value of securities are reported in the income statement for which type of securities?

Eric Company reports its income from its investment in Kate Company under the equity method.Eric recognized income of $150,000 from its investment in Kate during the current year.No dividends were declared or paid by Kate during the year.Eric would show the $150,000 in its statement of cash flows for the current year prepared under the indirect method as

The following information is available for an enterprise's security investments as of December 31,2014: -In June 2015,the enterprise decided to reclassify the Flash bonds as securities available-for-sale.The bonds had a market value of $31,000 at the time of the reclassification. What amount of holding gain or loss is immediately recognized in 2015 earnings?

On January 2,2014,Nora Co.acquired 2,000 shares of Stonewall Co.common stock for $8,000 and classified these shares as available-for-sale securities.During 2014,Nora received $6,000 of cash dividends.Nora's share of Stonewall's 2014 earnings (net income)was $5,000.The fair value of Stonewall's stock on December 31,2014,was $7 per share.Nora should report what amount in 2014 related to Stonewall Co.?

On January 1,2014,Stillman Inc.purchased 30 percent of the outstanding common stock of Overrun Corporation for $516,000 cash.Stillman is accounting for this investment using the equity method.On the date of acquisition,the fair value of Overrun' net assets was $1,240,000.Stillman has determined that the excess of the cost of the investment over its share of Overrun' net assets is attributable to goodwill.Overrun' net income for the year ended December 31,2014,was $360,000.During 2014,Overrun declared and paid cash dividends of $40,000.There were no other transactions between the two companies.Ignoring income taxes,Stillman' statement of income for the year ended December 31,2014,should include "Income From Investment in Overrun Corporation Stock" in the amount of

Gabriel Co.executed the following long-term investment transactions during the current year. Prepare journal entries with appropriate supporting computations for the year's transactions.

The following selected information is available from the financial statements of a large global company: Required: Use the financial information above to answer the following questions:

The following information is available for an enterprise's security investments as of December 31,2014: -In June 2015,the enterprise decided to reclassify the Mingo stock as trading securities.The stock had a market value of $41,000 at the time of the reclassification. What amount of holding gain or loss is immediately recognized in 2015 earnings?

On January 1,2013,a company purchased four 5%,$1,000 Esso bonds at 103 as an investment in securities available-for-sale.The bonds pay interest each December 31 and have four years remaining to maturity on the purchase date.The market value of the bonds on December 31,2013,was 107,and on December 31,2014,was 105. The entry to adjust the carrying value of the securities available-for-sale at December 31,2014,will include a

Springer Inc.carries the following marketable equity securities on its books at December 31,2013,and 2014.All securities were purchased during 2013 and there were no beginning balances in any market adjustment accounts. The cost method is used in accounting for all investments in securities.

On October 1,Ryan Company purchased $200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as held-to-maturity securities.Interest is paid semiannually on January 1 and July 1.Brokerage fees for this transaction were $700.At what amount should this acquisition of bonds be recorded?

King Company purchased 30% of Andei Company for $2,500,000 at the beginning of the current year.Andei earned $400,000 and declared and paid $300,000 of dividends during the current year.Which of the following correctly describes the effect of these transactions on the statement of cash flows of King Company prepared under the indirect method? Operating Activities Investing Activities

Angular Co.purchased the following portfolio of available-for-sale securities during 2014 and reported the following balances at December 31,2014.No sales occurred during 2014.All declines are considered to be temporary. Angular Co.should report what amount related to the securities transactions in its 2014 income statement?

From the following,select the most appropriate basis for the valuation of a new investment when properties or services are exchanged for stock.

When an investor uses the equity method to account for investments in common stock,the investment account will be increased when the investor recognizes

Rider Company had the following portfolio of securities at the end of its first year of operations: