Question :
51. Which of the following statements below not a reason a : 1246640
51. Which of the following statements below is not a reason a company may purchase another company’s stock?
A. earning a return on excess cash
B. buoying up the other company’s stock price
C. gaining control of another company’s operations
D. developing or maintaining business relationships
52. The cost method of accounting for investments
A. requires the investment to be reported at its market value
B. requires the investment to be reported at its original cost in the balance sheet
C. requires the investment be increased by the reported net income of the investee
D. requires the investment be decreased by the reported net income of the investee
53. An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?
A. $12,750 gain
B. $600 gain
C. $600 loss
D. $9,250 loss
54. During the current year, the Yankton Company purchased 200 shares of in the Sorros Company for $13,000 as a temporary investment. At the end of the year, the market value of the stock was $11,000. The Yankton Company’s financial statements for the current year should show
A. a loss of $2,000 on the income statement and temporary investments of $13,000 on the balance sheet
B. no loss on the income statement and temporary investments of $13,000 on the balance sheet
C. a gain of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet
D. a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet
55. The account Unrealized Loss on Temporary Investments in Stock should be included in the
A. Income statement
B. Balance sheet as an addition to Temporary Investments in Stock
C. Balance sheet as a deduction in Stockholders’ Equity
D. Statement of Retained Earnings
56. The equity method of accounting for investments
A. requires a year-end adjustment to revalue the stock to lower of cost or market
B. requires the investment to be reported at its original cost
C. requires the investment be increased by the reported net income of the investee
D. requires the investment be decreased by the reported net income of the investee
57. Armando Company owns 15,000 of the 50,000 shares of common stock outstanding of Tito Company and exercises a significant influence over its operating and financial policies. The investment should be accounted for by the
A. equity method
B. market method
C. cost or market method
D. cost method
58. Under the equity method, the receipt of cash dividends on an investment in common stock of Vallerio Corporation is accounted for as a debit to Cash and a credit to
A. Investment in Vallerio
B. Retained Earnings
C. Dividend Revenue
D. Dividend Receivables
59. Long-term investments are held for all of the listed reasons below except
A. their income
B. long-term gain potential
C. influence over another business entity
D. meet current cash needs
60. The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the
A. cost method
B. market method
C. income method
D. equity method
