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Merged Reviews - Grade for Donna Semien Unit 9 Review 1...

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Grade for Donna Semien: Unit 9 Review 1. Question: Which of the following categories of investments are reported at their fair values on the balance sheet and have unrealized holding gains and losses included as a separate component of stockholders' equity? Your Answer: held-to-maturity debt securities marketable securities available-for-sale securities CORRECT trading securities 2. Question: The Rolla Company purchased 10%, $800,000 bonds of the Batter Up Company at par plus accrued interest on April 1, 2010, as an investment in available-for-sale securities. The bonds pay interest on June 30 and December 31 each year. The entry by Rolla on April 1, 2010, would include a Your Answer: Page 1 of 131
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3. Question: How is the premium or discount on held-to-maturity bond investments presented on the balance sheet? Your Answer: 4. Question: On January 1, 2010, New Company purchased $200,000 of 10-year 10% bonds of Old Company for $226,840. Interest is payable annually. The effective yield on the investment is 8%. What is the balance in New's investment in held-to-maturity bonds account (rounded to the nearest dollar, if necessary) at December 31, 2011? Your Answer: 5. Question: Page 2 of 131
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All of the following statements regarding held-to-maturity debt securities are true except Your Answer: 6. Question: Permanent value declines in available-for-sale securities should be Your Answer: 7. Question: Which of the following disclosures is not required for investments in securities by current GAAP? Your Answer: Page 3 of 131
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8. Question: A major controversy surrounding fair value accounting for investments is that Your Answer: 9. Question: Investment securities are classified based upon management’s intent. This may present difficulties to readers of financial statements because Your Answer: 10. Question: Page 4 of 131
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With the equity method, the investor recognizes its share of the earnings of the subsidiary when the Your Answer: 11. Question: The generally accepted accounting principles for trading securities include all of the following except Your Answer: 12. Question: Unrealized gains and losses on investments in trading securities are reported Your Answer: Page 5 of 131
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13. Question: Charlie Company purchased available-for-sale equity investments in 2010 at a cost of $200,000. Their market values totaled $250,000 and $230,000 on December 31, 2010, and December 31, 2011, respectively. The entry required on December 31, 2011, would include a Your Answer: 14. Question: On July 1, 2010, Iris Company purchased 800 bonds having $1,000 face value and an 8% interest rate. Interest is paid on June 30 and December 31. The purchase price was 97. The bonds are classified by Iris as available for sale. The market value of the bonds on December 31, 2010, was $789,000. Ignoring amortization, the income statement for the year ended December 31, 2010, would report income (loss) related to this investment in the amount of Your Answer: 15.
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