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accouting test - 1.'s""isimportantis C) 2. :

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1.  The investment category for which the investor's "positive intent and ability to hold" is important is:  C) Securities classified as held to maturity. 2.  Securities that are purchased with the intent of selling them in the near future to take advantage of short-term  price changes are classified as:  D) Trading securities.  3.  All investments in debt and equity securities that don't fit the definitions of the other reporting categories are  classified as:  B) Securities available for sale. 4.  The income statement reports changes in fair value for which type of securities?  B) Trading securities  5.  If the fair value option is elected, regardless of managements intent regarding holding or trading the  securities in the short term, the investment will be treated just like which type of securities? B) Trading securities  6.  When an equity security is appropriately carried and reported as securities available for sale, a gain should  be reported on the income statement:  D) Only when the security is sold.  7.  When an impairment of securities available for sale occurs for a reason that is judged to be "other than  temporary," the investment is written down to its fair market value and the amount of the write-down is:  B) Included in income. 8.  The equity method of accounting for investments in voting common stock is appropriate when:  A) The investor can significantly influence the investee. 9.  When the investor's level of influence changes, it may be necessary to change from the equity method to  another method. When the level of ownership falls from a range of 20% to 50% to less than 20%, the equity  method would be discontinued and the investment account balance would be carried over at:  D) The current balance, and this balance would serve as the new "cost".  10.  When the investor's level of influence changes, it may be necessary to change to the equity method from  another method. When the level of ownership rises from less than 20% to a range of 20% to 50%, the equity  method would become appropriate and the investment account balance should be:  A) Retrospectively adjusted to the balance that would have existed if the equity method had been in effect for  prior years. 
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11.  Assume that, on 1/1/06, Matsui Co. paid $1,200,000 for its investment in 60,000 shares of Yankee Inc.  Further, assume that Yankee has 200,000 total shares of stock issued. The book value and fair value of  Yankee's identifiable net assets were both $4,000,000 at 1/1/06. The following information pertains to Yankee 
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