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In accordance with the historical cost principle

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6.In accordance with the historical cost principle, brokerage fees should be added to thecost of an investment.FSAH-5
7.In accordance with the historical cost principle, the cost of debt investments includesbrokerage fees and accrued interest.FSA
8.The accounting for short-term debt investments and for long-term debt investments issimilar.Reporting
9.When investments in bonds are sold, any difference between the sales price and the fairvalue of the bonds is recorded as a gain or loss.FSA
FOR INSTRUCTOR USE ONLY
Test Bank for Financial Accounting: Tools for Business Decision Making, Eighth Edition10.Debt investments are investments in government and corporation bonds.Reporting
11.Dividends received on stock investments of less than 20% should be credited to theStock Investments account.FSA
12.Dividends received on investments are accounted for in the same way under the cost andthe equity method.FSA
13.Unless there is evidence to the contrary, an investor owning 25% of the stock of aninvestee is assumed to have significant influence.

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