32. The investment category for which the investor's "positive intent and ability to hold" is
A. Securities reported under the equity method.
B. Trading securities.
C. Securities classified as held to maturity.
D. Securities available for sa
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42. If Dinsburry Company concluded that an investment originally classified as a trading
security would now more appropriately be classified as held to maturity, Dinsburry would:
A. not reclassify the investment, as original classifications are irrevocabl
88. If Pop Company exercises significant influence over Son Company and owns 40% of its
common stock, then Pop Company:
A. Would record dividends received from Son Company as investment revenue.
B. Would increase its investment account when Son Company de
84. The Guitar World (TGW) holds an investment that increased in fair value over 2011, and
accounts for that investment as available for sale. When considering taxes, TGW would:
A. recognize tax expense on the income statement, and probably increase taxes
77. Boulter, Inc. began business on January 1, 2011. At the end of December 2011, Boulter had
the following investments in equity securities:
All declines in value are deemed to be temporary in nature. How should the corresponding
losses be reflected in t
80. If an available-for-sale investment is sold for which there are unrealized losses in
accumulated other comprehensive income (AOCI), the total effect on total comprehensive
A. an increase.
B. a decrease.
C. no effect.
D. can't determine given
75. Dim Corporation purchased 1,000 shares of Witt Corporation stock in 2008 for $800 per
share and classified the investment as securities available for sale. Witt's market value was $400
per share on December 31, 2009, and $300 on December 31, 2010. Dur
72. On January 2, 2010, Howdy Doody Corporation purchased 12% of Ranger Corporation's
common stock for $50,000 and classified the investment as available for sale. Ranger's net
income for the years ended December 31, 2010 and 2011, were $10,000 and $50,00
51. In the statement of cash flows, inflows and outflows of cash from buying and selling trading
securities typically are considered:
A. Investing activities.
B. Operating activities.
C. Financing activities.
D. Noncash financing activities.
52. Dyckman D
69. In the statement of cash flows, inflows and outflows of cash from buying and selling
available for sale securities are considered:
A. Operating activities.
B. Financing activities.
C. Investing activities.
D. Noncash financing activities.
65. When an investor classifies an investment in common stock as securities available for sale,
cash dividends are classified by the investor as:
A. A return of capital.
B. A loss.
C. A deduction from the investment account.
D. Dividend income.
66. When a
60. 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.
57. Hobson Company bought the securities listed below during 2010. These securities were
classified as trading securities. In its December 31, 2010, income statement Hobson reported a
net unrealized loss of $13,000 on these securities. Pertinent data at t
54. Anthers Inc. bought the following portfolio of trading securities near the end of 2011.
What amount will be reported in the balance sheet for this portfolio at December 31, 2011, and
how will it be classified?
A. Option A
B. Option B
C. Option C
93. When the investor's level of influence changes, it may be necessary to change from the
equity method to another method. When the level of ownership falls from a range of 20% to
50% to less than 20%, the equity method typically would be discontinued an
96. Which of the following is not true about accounting for investments under IFRS?
A. IFRS allows proportionate consolidation of investments where two or more investors have
B. IFRS is more restrictive than U.S. GAAP concerning when an inv
136. The following transactions occurred during the year for XYZ Corporation:
(a.) During the year, trading securities were purchased for $250,000.
(b.) During the year, securities available for sale were purchased for $80,000.
(c.) During the year, tradi
138. Eastwood Enterprises owns 30,000 shares of the Van Cleef Company (5% of the
outstanding equity of Van Cleef). Eastwood is trying to determine Van Cleef's fair value. The
relevant facts are as follows:
Eastwood bought the Van Cleef shares earlier in
134. On January 1, 2011, Hoosier Company purchased $930,000 of 10% bonds at face value.
The bond market value was $980,000 on December 31, 2011.
Prepare the appropriate journal entry on December 31, 2011, to properly value the bonds
129. Dicker Furriers purchased one thousand shares of Loose Corporation stock on January 10,
2010, for $800 per share and classified the investment as securities available for sale. Loose's
market value was $400 per share on December 31, 2010, and the dec
132. On March 1, 2011, Navy Corporation used excess cash to purchase U.S. Treasury bonds
for $103,000 plus accrued interest. The appropriate interest rate is 6%. Interest on these bonds
is payable on January 1 and July 1 of each year. Navy's investment is
Nichols Corporation purchased $100,000 of Holly Inc 6% bonds at par with the intent and
ability to hold the bonds until they matured in 2015, so Nichols classifies its investment as held
to maturity. Unfortunately, a combination of problems at Holly and i
123. If the fair value of a debt investment that is classified as an available-for-sale investment
declines for a reason that is viewed as "other than temporary" because it is viewed as "more
likely than not" that the investor will be required to sell the
119. If the fair value of a held-to-maturity investment declines for a reason that is viewed as
"other than temporary" because the company has incurred a credit loss on the investment,
A. the investment is written down to fair value, and only the non-cred
111. Which of the following is not true about the fair value option?
A. The fair value option is irrevocable.
B. The fair value option must be elected for all shares of an investment in a particular company.
C. Electing the fair value option for held-to-m
115. Which of the following is NOT true about the "fair value through profit and loss" approach
for accounting for investments under IFRS?
A. Allowed under both IAS No. 39 and IFRS No. 9.
B. Includes unrealized gains in earnings.
C. Requires reclassificat
108. The total amount of additional depreciation to be recognized by SBC over the remaining
life of the assets is:
A. $4.5 million.
B. $15 million.
C. $27 million.
D. None of the above is correct.
109. Assume that, on 1/1/11, Sosa Enterprises paid $5,100,
105. When the equity method of accounting for investments is used by the investor, the
amortization of additional depreciation due to differences between book values and fair values
of investee assets on the date of acquisition:
A. Reduces the investment
102. Gerken Company concluded at the beginning of 2011 that the company's ownership
interest in DillCo had increased to the point that it became appropriate to begin using the equity
method to account for the investment. The balance in the investment acco