405quiz2pinksummer2011

405quiz2pinksummer2011 - a. $3,588. b. $2,056. c. $1,794....

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Name______________________ Pink Quiz 2 ACCT 405 1. When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following statements applies? a. The investor should always use the equity method to account for its investment. b. The investor should use the equity method to account for its investment unless circum-stances indicate that it is unable to exercise "significant influence" over the investee. c. The investor should always use the fair value method to account for its investment. Patton Company purchased $600,000 of 10% bonds of Scott Co. on January 1, 2013, paying $564,150. The bonds mature January 1, 2023; interest is payable each July 1 and January 1. The discount of $35,850 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity. Cash Int Rev Amort Book Value 564150 30000 31028 1028 565178 30000 31085 1085 566263 62113 2. On July 1, 2013, Patton Company should increase its Debt Investments ( or Investment in Bonds) account for the Scott Co. bonds by
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Unformatted text preview: a. $3,588. b. $2,056. c. $1,794. d. $1,028. 3. For the year ended December 31, 2013, Patton Company should report interest revenue from the Scott Co. bonds of: a. $63,588. b. $62,113. c. $62,052. d. $60,000. Use the following information for questions 4 and 5. Instrument Corp. has the following investments which were held throughout 20122013: Fair Value Cost 12/31/12 12/31/13 Trading $450,000 $600,000 $570,000 Available-for-sale 450,000 480,000 540,000 4. What amount of unrealized gain or unrealized loss would Instrument Corp. report in its income statement for the year ended December 31, 2013 related to its investments? a. $30,000 gain. b. $30,000 loss. c. $210,000 gain. d. $120,000 gain. 5. What amount would be reported as accumulated other comprehensive income related to investments in Instrument Corp.s balance sheet at December 31, 2012? a. $60,000 gain. b. $90,000 gain. c. $30,000 gain. d. $180,000 gain....
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405quiz2pinksummer2011 - a. $3,588. b. $2,056. c. $1,794....

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