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Gardens,Inc.invests its excess cash in Innovative Technologies,Inc.and acquires 4300 shares for $28.00 per share.Garden,Inc.owns less than 3% of Innovative's voting stock and plans to hold the stock for two years.Which of the following is the correct journal entry for the transaction?


A)
Gardens,Inc.invests its excess cash in Innovative Technologies,Inc.and acquires 4300 shares for $28.00 per share.Garden,Inc.owns less than 3% of Innovative's voting stock and plans to hold the stock for two years.Which of the following is the correct journal entry for the transaction? A) B) C) D)
B)
Gardens,Inc.invests its excess cash in Innovative Technologies,Inc.and acquires 4300 shares for $28.00 per share.Garden,Inc.owns less than 3% of Innovative's voting stock and plans to hold the stock for two years.Which of the following is the correct journal entry for the transaction? A) B) C) D)
C)
Gardens,Inc.invests its excess cash in Innovative Technologies,Inc.and acquires 4300 shares for $28.00 per share.Garden,Inc.owns less than 3% of Innovative's voting stock and plans to hold the stock for two years.Which of the following is the correct journal entry for the transaction? A) B) C) D)
D)
Gardens,Inc.invests its excess cash in Innovative Technologies,Inc.and acquires 4300 shares for $28.00 per share.Garden,Inc.owns less than 3% of Innovative's voting stock and plans to hold the stock for two years.Which of the following is the correct journal entry for the transaction? A) B) C) D)

E) C) and D)
F) B) and C)

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Jonas Corporation has excess cash to invest and pays $200,000 to buy 7%,five-year bonds of Ridgeline Corporation,at face value,on June 30,2018.The bonds pay interest on June 30 and December 31.Jonas intends to hold the bonds to maturity.The bonds are disposed of,at face value,on June 30,2023. Prepare the journal entry for December 31,2018 (omit the explanation).

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blured image Interest ...

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Which of the following may pay dividends?


A) preferred stock
B) investors
C) Treasury bills
D) notes payable

E) A) and B)
F) B) and C)

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A parent company is a company that ________.


A) is controlled by another corporation
B) owns a controlling interest in another company
C) is the first to begin operations in an industry
D) has any level of investment in another company

E) B) and C)
F) A) and B)

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Consolidation accounting is the way to combine the financial statements of two or more companies that have the same owners.

A) True
B) False

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Which of the following statements regarding debt securities is incorrect?


A) Debt securities include Held-to-Maturity Debt Investments,Trading Debt Investments,and Available-for-Sale Debt Investments.
B) When recording the receipt of interest revenue on Trading Debt Investments,Interest Revenue is credited.
C) If a Held-to-Maturity Debt Investment is purchased at a discount or premium,the discount/premium must be amortized when the interest revenue is earned.
D) All investments in debt securities are categorized as long-term assets.

E) B) and D)
F) C) and D)

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Significant influence equity investments are reported as ________ on the balance sheet.


A) current assets
B) either current assets or current liabilities
C) long-term assets
D) either current assets or long-term assets

E) B) and C)
F) C) and D)

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The unrealized holding gains and losses on available-for-sale debt investments are recorded as an adjustment to the Unrealized Holding Gain-Available-for-Sale account or Unrealized Holding Loss-Available-for-Sale account.

A) True
B) False

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Trading debt investments include ________.


A) debt securities that the investor expects to hold longer than one year or debt securities that are not readily marketable
B) investments in debt securities that are not readily marketable and that the investor intends to hold until they mature
C) investments in debt securities that the investor intends to hold until they mature
D) debt securities that the investor plans to sell in the very near future

E) A) and C)
F) B) and C)

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For each of the following transactions related to Held-to-Maturity Debt securities,state the following: (1)Which account(s)is (are)increased? (2)Which account(s)is (are)decreased? (3)What is the net effect on total assets and total equity? This net effect can be increase,decrease,or no net effect. Transaction: a.The investment was purchased at $50,000 (face value)plus brokerage fees of $2,000. b.Semi-annual interest of $1,500 was received. c.The investment was disposed of at maturity.Cash in the amount of $50,000 was received. For each of the following transactions related to Held-to-Maturity Debt securities,state the following: (1)Which account(s)is (are)increased? (2)Which account(s)is (are)decreased? (3)What is the net effect on total assets and total equity? This net effect can be increase,decrease,or no net effect. Transaction: a.The investment was purchased at $50,000 (face value)plus brokerage fees of $2,000. b.Semi-annual interest of $1,500 was received. c.The investment was disposed of at maturity.Cash in the amount of $50,000 was received.

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Littlefield Industries purchased a bond on September 1 of the current year for $200,000 and classified the investment as trading debt.The market value of the trading debt investment at year-end is $196,000.The adjustment is ________.


A) reported as a separate component of stockholders' equity
B) added to the Trading Debt Investments account
C) not reported on the income statement because the bond has not been disposed of
D) reported as a $4,000 unrealized holding loss in the Other Income and (Expenses) section of the income statement

E) C) and D)
F) None of the above

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Which of the following is true of available-for-sale (AFS) debt investments?


A) They are always reported as current assets in the balance sheet.
B) They are always reported as long-term assets in the balance sheet.
C) They are reported as current assets on the balance sheet only if the business expects to sell them within the first two years.
D) They are reported as long-term assets on the balance sheet only if they are planned to be held for longer than a year.

E) All of the above
F) B) and C)

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A ________ ownership in the investee's voting stock can significantly influence the investee's decisions.


A) 10 percent
B) 5 percent to 10 percent
C) 15 percent to 20 percent
D) 20 percent to 50 percent

E) B) and D)
F) None of the above

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When a trading debt security is disposed,the fair value adjustment is used in determining the calculation of the gain or loss on disposal.

A) True
B) False

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Which of the following is true of trading debt investments?


A) They are held for more than two years.
B) They are generally recorded as long-term investments.
C) They must be adjusted and reported at fair value at the end of each period.
D) They are always reported on the balance sheet at their historical cost.

E) None of the above
F) C) and D)

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Which of the following is an example of debt securities?


A) preferred stocks
B) real estate
C) common stocks
D) corporate bonds

E) B) and C)
F) C) and D)

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Which of the following will be classified as an available-for-sale debt investment?


A) debt securities which the investor intends to sell in the very near future
B) debt securities the investor intends to hold and has the ability to hold until they mature
C) all investments in Treasury bills
D) all debt securities that are not trading debt investments or held-to-maturity debt investments

E) None of the above
F) A) and B)

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Available-for-sale (AFS) debt investments are reported as ________ if the business expects to sell them within one year.


A) current assets
B) equity
C) long-term assets
D) either current assets or long-term assets

E) A) and D)
F) None of the above

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The Unrealized Holding Gain-Available-for-Sale account and Unrealized Holding Loss-Available-for-Sale account are included the Other Income and (Expenses)section of the income statement.

A) True
B) False

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Orbit Services,Inc.pays $700,000 to acquire 30% (200,000 shares) of the voting stock of State Investments,Inc.on January 5,2019.State Investments,Inc.declares and pays a cash dividend of $1.40 per share on June 14,2019.Which of the following is the correct journal entry for the transaction on June 14,2019?


A)
Orbit Services,Inc.pays $700,000 to acquire 30% (200,000 shares) of the voting stock of State Investments,Inc.on January 5,2019.State Investments,Inc.declares and pays a cash dividend of $1.40 per share on June 14,2019.Which of the following is the correct journal entry for the transaction on June 14,2019? A) B) C) D)
B)
Orbit Services,Inc.pays $700,000 to acquire 30% (200,000 shares) of the voting stock of State Investments,Inc.on January 5,2019.State Investments,Inc.declares and pays a cash dividend of $1.40 per share on June 14,2019.Which of the following is the correct journal entry for the transaction on June 14,2019? A) B) C) D)
C)
Orbit Services,Inc.pays $700,000 to acquire 30% (200,000 shares) of the voting stock of State Investments,Inc.on January 5,2019.State Investments,Inc.declares and pays a cash dividend of $1.40 per share on June 14,2019.Which of the following is the correct journal entry for the transaction on June 14,2019? A) B) C) D)
D)
Orbit Services,Inc.pays $700,000 to acquire 30% (200,000 shares) of the voting stock of State Investments,Inc.on January 5,2019.State Investments,Inc.declares and pays a cash dividend of $1.40 per share on June 14,2019.Which of the following is the correct journal entry for the transaction on June 14,2019? A) B) C) D)

E) A) and B)
F) C) and D)

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