Chapter 17 Quiz

Chapter 17 Quiz - 1. Debt securities that are accounted for...

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1.  Debt securities that are accounted for at amortized cost, not fair value, are  A) held-to-maturity debt securities.  B) trading debt securities.  C) available-for-sale debt securities.  D) never-sell debt securities.  Points Earned:  3.0/3.0  Correct Answer(s): 2.  Use the following information for questions 2 and 3.
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Patton Company purchased $400,000 of 10% bonds of Scott Co. on January 1, 2011, paying $376,100. The  bonds mature January 1, 2021; interest is payable each July 1 and January 1. The discount of $23,900 provides  an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to  maturity. On July 1, 2011, Patton Company should increase its Held-to-Maturity Debt Securities account for the Scott Co.  bonds by A) $2,392.  B) $1,371.  C) $1,196.  D) $686.  Points Earned:  3.0/3.0  Correct Answer(s): 3.  For the year ended December 31, 2011, Patton Company should report interest revenue from the Scott Co.  bonds of:  A) $42,392.  B) $41,409.  C) $41,368.  D) $40,000.  Points Earned:  3.0/3.0  Correct Answer(s): 4.  <P Use the following information for questions 4 and 5.  Instrument Corp. has the following investments which were held throughout 2010–2011:     Market Value   Cost 12/31/10 12/31/11 Trading $300,000 $400,000 $380,000 Available-for-Sale 300,000 320,000 360,000
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What amount of gain or loss would Instrument Corp. report in its income statement for the year ended 
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Chapter 17 Quiz - 1. Debt securities that are accounted for...

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