Question :
61. When shares of stock held as an investment sold, the : 1246641
61. When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)
A. prior period adjustment
B. extraordinary gain or loss
C. paid-in capital addition
D. gain or loss
62. Temporary investments are
A. recorded at cost but reported at fair market value
B. recorded at cost and reported at cost
C. recorded at cost but reported at lower of cost or fair market value
D. recorded at fair market value and reported at fair market value
63. Which one of the following items below would not affect the investor’s income for the period?
A. interest received on a temporary investment in bonds
B. dividends received on a long-term investment in stock where the investor owns 10% of the investee’s stock
C. dividends received on a long-term investment in stock where the investor owns 30% of the investee’s stock
D. interest received on a long-term investment in bonds
64. Wendell Company owns 28% of the common stock of Porter Company and accounts for the investment using the equity method. Assuming that Wendell Company purchased the stock several years ago, the balance in the investment account would be equal to the cost of the
A. investment
B. investment plus Wendell’s share of Porter’s net income earned since the investment was purchased
C. investment plus the total amount of dividends Wendell has received from Porter since the investment was purchased
D. investment plus Wendell’s share of Porter’s net income earned since the investment was purchased minus the total amount of dividends Wendell has received from Porter since the investment was purchased
65. Blanton Corporation purchased 17% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the purchase of Worton Corporation common stock?
A. debit Investment in Worton Corporation; credit Cash
B. debit Cash; credit Dividend Revenue
C. debit Investment in Worton Corporation; credit Income of Worton Corporation
D. debit Cash; credit Investment in Worton Corporation
66. Blanton Corporation purchased 17% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record dividends from Worton Corporation?
A. debit Investment in Worton Corporation; credit Cash
B. debit Cash; credit Dividend Revenue
C. debit Investment in Worton Corporation; credit Income of Worton Corporation
D. debit Cash; credit Investment in Worton Corporation
67. Blanton Corporation purchased 35% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record its share of the earnings of Worton Corporation?
A. debit Investment in Worton Corporation Stock; credit Cash
B. debit Cash; credit Dividend Revenue
C. debit Investment in Worton Corporation; credit Income of Worton Corporation
D. debit Cash; credit Investment in Worton Corporation
68. Blanton Corporation purchased 35% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the dividends it receives from Worton Corporation?
A. debit Investment in Worton Corporation; credit Cash
B. debit Cash; credit Dividend Revenue
C. debit Investment in Worton Corporation; credit Income of Worton Corporation
D. debit Cash; credit Investment in Worton Corporation
69. Zach Company owns 40% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $20,000 net loss. Zach Corporation’s entry would include a
A. Debit to the investment account for $20,000
B. Debit to the investment account for $8,000
C. Credit to the investment account for $8,000
D. Debit to a loss account for $8,000
70. Parker Company owns 83% of the outstanding stock of Tadeo Company. Parker Company is referred to as the
A. parent
B. minority interest
C. affiliate
D. subsidiary
