Practice Test1-debit123 - Practice Test #1 Intermediate...

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Practice Test #1 Intermediate Accounting II Dr. Edward Nathan [1] Gleim #: 10.1.2 -- Source: CPA, adapted At year end, Slim Co. held several investments with the intent of selling them in the near term. The investments consisted of $100,000, 8%, five-year bonds, purchased for $92,000, and equity securities purchased for $35,000. At year-end, the bonds were selling on the open market for $105,000, and the equity securities had a market value of $50,000. What amount should Slim report as trading securities in its year-end balance sheet? A. $50,000 B. $127,000 C. $142,000 D. $155,000 [2] Gleim #: 10.1.4 -- Source: CPA 595 F-6 A company should report the marketable equity securities that it has classified as trading at A. Lower of cost or market, with holding gains and losses included in earnings. B. Lower of cost or market, with holding gains included in earnings only to the extent of previously recognized holding losses. C. Fair value, with holding gains included in earnings only to the extent of previously recognized holding losses. D. Fair value, with holding gains and losses included in earnings. [
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3] Gleim #: 10.1.12 -- Source: CPA 592 II-7 The following information pertains to Lark Corp.’s available-for-sale securities: December 31 Year 2 Year 3 Cost $100,000 $100,000 Fair value 90,000 120,000 Differences between cost and fair values are considered to be temporary. The decline in fair value was properly accounted for at December 31, Year 2. Ignoring tax effects, by what amount should other comprehensive income (OCI) be credited at December 31, Year 3? A. $0 B. $10,000 C. $20,000 D. $30,000 [4] Gleim #: 10.1.18 -- Source: CPA 591 I-58 On January 2, Year 1, Adam Co. purchased as a long-term investment 10,000 shares of Mill Corp.’s common stock for $40 a share. These securities were properly classified as available for sale. On December 31, Year 1, the market price of Mill’s stock was $35 a share, reflecting a temporary decline in market price. On January 28, Year 2, Adam sold 8,000 shares of Mill stock for $30 a share. For the year ended December 31, Year 2, Adam should report a realized loss on disposal of a long-term investment of A. $100,000 B. $80,000 C. $60,000 D. $40,000 [5] Gleim #: 10.1.31 -- Source: Publisher In accordance with SFAS 115, a reclassification of available-for-sale securities to the held-to-maturity category will result in A. The amortization of an unrealized gain or loss existing at the transfer date. B. The recognition in earnings on the transfer date of an unrealized gain or loss. C. The reversal of any unrealized gain or loss previously recognized in earnings. D. The reversal of any unrealized gain or loss previously recognized in other comprehensive income.
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[6] Gleim #: 10.4.75 -- Source: Publisher Bonds that investors may present for payment prior to maturity are A. Callable bonds. B.
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This note was uploaded on 04/06/2011 for the course ECON 3332 taught by Professor Craig during the Spring '11 term at Rensselaer Polytechnic Institute.

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Practice Test1-debit123 - Practice Test #1 Intermediate...

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