Accounting Ch. 15

Temporary investments such as in trading securities are: A. recorded at cost but reported at fair market value B. recorded at cost and reported at cost C. recorded at cost but reported at lower of cost or fair market value D. recorded at fair market value and reported at fair market value

interest revenue on bonds is reported: A. as an addition to the investment in bonds account B. as part of comprehensive income but not as part of net income C. as part of other income D as part of operating income

which of the following stock investments should be accounted for using the cost method: A. investments of less than 20% B. investments between 20% and 50% C. investments of less than 20% and investments between 20% and 50% D. all stock investments should be accounted for using the cost method

interest revenue on bonds is reported: a.as an addition to the investment in bonds account b.as part of comprehensive income but not as part of net income c. as part of other income d. as part of operating income

which of the following statements is not a reason a company may purchase another company's stock: a. earning a return on excess cash b. sustain the other company's stock price c. gaining control of another companys operations d. developing or maintaining business relationship

the equity method of accounting for investments A. requires a year-end adjustment to revalue the stock to lower of cost or market B. requires the investment to be reported at its original cost C. requires the investment be increased by the reported net income of the investee D. requires the investment be increased by the dividends paid by the investee

the cost method of accounting for stock A. recognizes dividends as income B. is only appropriate as part of consolidation C. requires the investment be increased by the reported net income of the investee D. requires the investment by decreased by the reported net income of the investee

armando company owns 17,000 of the 70,000 shares of common stock outstanding of tito company and exercises a significant influence over its operating and financial policies. the investment should be accounted for by the : A. equity method B. market method C. cost of market method D. cost method

under the equity method the receipt of cash dividends on an investment in common stock of vallerio corporation is accounted for as a debit to cash and a credit to A. investment in vallerio B. retained earnings C. dividend revenue D. dividend receivables

the method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the: A. cost method B. market method C. income method D. equity method

when shares of stock held as an investment are sold the difference between the proceeds and the carrying amount of the investment is recorded as a(n): A. prior period adjustment B. operating income and losses C. paid-in capital addition D. gain or loss

which of the following items would not affect the investors income for the period? A. interest received on a temporary investment in bonds B. dividends received on a long-term investment in stock where the investor owns 10% of the investees stock C. dividends received on a long-term investment in stock where the investor owns 30% of the investees stock D. interest received on a long-term investment in bonds

wendell company owns 18% of the common stock of the porter company and accounts for the investment using the equity method. Asssuming that wendell company purchased the stock several years ago, the balance in the investment account would be equal to the cost of the A. investment only B. investment plus wendells share of porters net income earned since the investment was purchased C. investment plus the total amount of dividends wendell has received from porter since the investment was purchased D. investment plus wendells share of the porters net income earned since the investment was purchased minus the total amount of dividends wendell has received from porter since the investment was purchased

blanton corporation purchased 15% 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 dividents. what journal entry would blanton corporation use to record the dividends it receives? A. debit to investment in worton corporation; credit cash B. debit cash; credit dividend revenue C. debit investment in worton corporation; credit income of worton corporation D. debit cash; credit investment in worton corporation

blanton corporation purchased 35% of the outstanding shares of commons 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 company A. debit investment in worton corporation stock; credit cash B. debit cash; credit dividend revenue C. debit investment in worton corporation stock; credit income of worton corporation D. debit cash; credit investment in worton corporation stock

zach company owns 45% of the voting stock of thomas corporation and uses the equity method in recording this investment thomas corporation reported a $20,000 net loss. zach companys entry would include a A. credit to cash for $9,000 B. debit to the investment account for $9,000 C. credit to the investment account for $9,000

parker company owns 83% of the outstanding stock of tadeo company. parker company is referred to as the A. parent B. minorit interest C. affiliate D. subsidiary