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Exam 15: Investments and International Operations

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Question 81

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Bond sinking funds are examples of short-term investments.

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Question 82

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Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

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equity met...

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Question 83

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If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment?

When using the equity method of accounting for investments in equity securities, the receipt of cash dividends is recorded as revenue.

Golden Age Co. exports Native American artwork to Japan. Prepare journal entries for the following transactions.

Short-term investments in held-to-maturity debt securities are accounted for using the:

__________________________ are investments in securities that are not readily convertible to cash or are not intended to be converted to cash in the short-term.

Consolidated financial statements show the financial position, results of operations, and cash flows of all entities under the parent's control.

Kramer Corporation had the following long-term investment transactions. Prepare the journal entries Kramer Corporation should record for these transactions and events.

Foreign exchange rates fluctuate due to many factors including changing political and economic conditions.

A company had investments in long-term available-for-sale securities. At the end of the current year, the company's portfolio had a $731,000 cost and $730,000 market value. What is the current year's adjustment to market value given the following account balances at the end of the prior year?

Acme owns 4,000 shares of XYZ. XYZ has 50,000 total shares of stock outstanding. XYZ paid $0.82 per share in cash dividends to its stockholders. Acme should record a:

Long-term investments:

Short-term investments:

Rhone Importers purchases automotive parts from Germany. Prepare journal entries for the following transactions of Rhone.

Held-to-maturity securities are:

A company paid $500,000 for 12% bonds with a par value of $500,000. The bonds pay 6% interest semiannually on September 1 and March 1. The company intends to hold the bonds until they mature. Prepare the journal entries for the following dates and transactions related to this bond acquisition. (1) Bonds purchased on September 1, 2012. (2) Year-end adjusting entry, December 31, 2012. (3) Receipt of semiannual interest March 1, 2013. (4) Redemption of the bonds at maturity on August 31, 2019.

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Long-term investments include:

Columbia Corp. held 1,500 of Vianco common stock with a cost of $74,387. These shares were classified as a long-term available-for-sale investment. It sold the shares on December 13 for $55,275. Prepare the journal entry to record this sale.