This preview shows page 1. Sign up to view the full content.
Unformatted text preview: at December 31, 2013?
49. Goofy Inc. bought 15,000 shares of Crazy Co.'s stock for $150,000 on May 5, 2012, and classified the
stock as available for sale. The market value of the stock declined to $118,000 by December 31, 2012.
Goofy reclassified this investment as trading securities in December of 2013 when the market value had
risen to $125,000. What effect on 2013 income should be reported by Goofy for the Crazy Co. shares?
$25,000 net loss.
$7,000 net gain.
$32,000 net loss. 50. Hobson Company bought the securities listed below during 2012. These securities were classified as
trading securities. In its December 31, 2012, income statement Hobson reported a net unrealized loss of
$13,000 on these securities. Pertinent data at the end of December 2013 is as follows: What amount of loss on these securities should Hobson include in its income statement for the year ended
December 31, 2013?
D. $0. 51. What is the effect on a company's cash flows and reported profit from accounting for an investment as a
trading security as compared to accounting for it as an available-for-sale security? A.
D. Option a
Option d 52. The fair value of debt securities not regularly traded can be most reasonably approximated by:
A. Calculating the discounted present value of the principal and interest payments.
B. Determining the value using similar securities in the NASDAQ market.
C. Using the relative fair value method.
D. Calling a licensed and registered stockbroker.
53. All investments in debt and equity securities that don't fit the definitions of the other reporting categories
are classified as:
A. Trading securities.
B. Securities available for sale.
C. Held-to-maturity securities.
D. Consolidated securities.
54. Investments in securities available for sale are reported at:
A. Discounted present value.
B. Lower of cost or market.
C. Historical cost.
D. Fair value on the reporting date.
55. All investment...
View Full Document
This document was uploaded on 07/05/2013.
- Spring '09
- Balance Sheet