Question : 121. All of the following statements regarding accounting for influential securities : 1225330

 

121. All of the following statements regarding accounting for influential securities under U.S. GAAP and IFRS are True except: 

A. Under the equity method, the share of investee’s net income is reported in the investor’s income in the same period the investee earns that income.

B. Under the consolidation method, investee and investor revenues and expenses are combined.

C. Under the equity method, the investment account equals the acquisition cost plus the share of investee income plus the share of investee dividends.

D. Under the consolidation method, nonintercompany assets and liabilities are combined (eliminating the need for an investment account).

E. U. S. GAAP companies commonly refer to noncontrolling interests in consolidated subsidiaries as minority interests whereas IFRS companies use noncontrolling interests.

122. All of the following statements regarding accounting for trading securities under U.S. GAAP are True except: 

A. The entire portfolio of trading securities is reported at is fair value.

B. An unrealized gain or loss from a change in fair value is reported on the income statement.

C. An unrealized gain or loss is recorded with an adjusting entry when the securities are sold.

D. An unrealized gain or loss is recorded with an adjusting entry at the end of each period.

E. Unrealized gains and losses are recorded in a temporary account that is closed to Income Summary at the end of the period.

123. All of the following statements regarding accounting for trading securities under U.S. GAAP are True except: 

A. The entire portfolio of trading securities is reported at is fair value.

B. An unrealized gain or loss from a change in fair value is reported on the income statement.

C. A realized gain or loss is recorded when the securities are sold and reported on the income statement.

D. When the period-end fair value adjustment for the portfolio of trading securities is computed, it includes the cost and fair value of any securities sold.

E. When the period-end fair value adjustment for the portfolio of trading securities is computed, it excludes the cost and fair value of any securities sold.

124. All of the following statements regarding other comprehensive income are True except: 

A. Other comprehensive income includes unrealized gains and losses on available-for-sale securities.

B. Other comprehensive income is not considered when calculating comprehensive income.

C. Other comprehensive income includes foreign currency adjustments.

D. Other comprehensive income includes pension adjustments.

E. Accumulated other comprehensive income is defined as the cumulative impact of other comprehensive income.

125. Seamark buys $300,000 of Eider’s 8% five-year bonds payable at par value. Interest payments are made semiannually. All of the following regarding accounting for the securities are True except: 

A. The debt securities should be recorded at the cost $300,000.

B. The securities will have a maturity value of $300,000.

C. The semiannual interest payment amount is $12,000.

D. The semiannual interest payment amount is $24,000.

E. Interest Revenue should be credited when an interest payment is received.

126. Seamark buys $300,000 of Eider’s 8% five-year bonds payable at par value. Interest payments are made semiannually. Seamark plans to hold the bonds for the five year life. The journal entry to record the purchase should include: 

A. A debit to Long-Term Investments-AFS $300,000.

B. A debit to Short-Term Investments-Trading $300,000.

C. A debit to Long-Term Investments-HTM $300,000.

D. A debit to Short-Term Investments-AFS $300,000.

E. A debit to Cash $300,000.

127. Seamark buys $300,000 of Eider’s 8% five-year bonds payable at par value on September 1. Interest payments are made semiannually on March 1 and September 1. The journal entry to accrue interest earned at year-end December 31 is: 

A. Debit Interest Receivable $8,000, credit Interest Revenue $8,000.

B. Debit Interest Receivable $12,000, credit Interest Revenue $12,000.

C. Debit Cash $8,000, credit Interest Revenue $8,000.

D. Debit Cash $12,000, credit Interest Revenue $12,000.

E. Debit Interest Revenue $8,000, credit Interest Receivable $8,000.

128. Seamark buys $300,000 of Eider’s 8% five-year bonds payable at par value. Interest payments are made semiannually. Seamark plans to hold the bonds for the five year life. When the bonds mature, the journal entry to record the proceeds will be: 

A. Debit Long-Term Investments-HTM $300,000; credit Cash $300,000.

B. Debit Cash $300,000; credit Interest Revenue $300,000.

C. Debit Cash $300,000; credit Long-Term Investments-HTM $300,000.

D. Debit Cash $300,000; credit Interest Receivable $300,000.

E. Debit Cash $300,000; credit Bonds Payable $300,000.

129. On February 15, Seacroft buys 7,000 shares of Kebo common stock at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The journal entry to record the purchase on February 15 is: 

A. Debit Long-Term Investments-HTM $199,710; credit Cash $199,710.

B. Debit Long-Term Investments-AFS $199,710; credit Cash $199,710.

C. Debit Long-Term Investments-Trading $199,710; credit Cash $199,710.

D. Debit Long-Term Investments-Trading $200,110; credit Cash $200,110.

E. Debit Long-Term Investments-AFS $200,110; credit Cash $200,110.

130. On February 15, Seacroft buys 7,000 shares of Kebo common stock at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The journal entry to record the dividend on April 15 is: 

A. Debit Cash $7,350; credit Dividend Revenue $7,350.

B. Debit Cash $8,050; credit Dividend Revenue $8,050.

C. Debit Cash $8,050; credit Interest Revenue $8,050.

D. Debit Cash $7,350; credit Interest Revenue $7,350.

E. Debit Cash $8,050; credit Gain on Sale of Investments $8,050.

131. On February 15, Seacroft buys 7,000 shares of Kebo common stock at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The journal entry to record the sale of the stock on November 17 is: 

A. Debit Cash $102,300; credit Long-Term Investments-AFS $99,855; credit Gain on Sale of Long-Term Investments $2,445.

B. Debit Cash $102,550; credit Long-Term Investments-Trading $99,855; credit Gain on Sale of Long-Term Investments $2,645.

C. Debit Cash $102,550; credit Long-Term Investments-AFS $100,055; credit Gain on Sale of Long-Term Investments $2,495.

D. Debit Cash $102,300; credit Long-Term Investments-AFS $100,055; credit Gain on Sale of Long-Term Investments $2,245.

E. Debit Cash $102,300; credit Long-Term Investments-Trading $99,855; credit Gain on Sale of Long-Term Investments $2,645.

132. On February 15, Seacroft buys 7,000 shares of Kebo common stock at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The fair value of the remaining shares is $29.50 per share. The amount that Seacroft should report on its year-end December 31 income statement related to the investment in Kebo is: 

A. $10,295.

B. $8,050.

C. $2,245.

D. $3,195.

E. $5,440.

133. On February 15, Seacroft buys 7,000 shares of Kebo common at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The fair value of the remaining shares is $29.50 per share. The amount that Seacroft should report in the equity section of its year-end December 31 balance sheet for its investment in Kebo is: 

A. $10,295.

B. $8,050.

C. $2,245.

D. $3,195.

E. $6,390.

134. On February 15, Seacroft buys 7,000 shares of Kebo common at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The fair value of the remaining shares if $29.50 per share. The amount that Seacroft should report in the asset section of its year-end December 31 balance sheet for its investment in Kebo is: 

A. $200,110.

B. $103,250.

C. $2,245.

D. $3,195.

E. $5,440.