Question :
71. An investor purchased at par value $75,000 of Cort’s 8% : 1225354
71. An investor purchased at par value $75,000 of Cort’s 8% bonds, that mature in three-years. The bonds pay interest semiannually on June 1 and December 1. The investor plans to hold the bonds until they mature. When the bonds mature, the investor should prepare the following journal entry:
A. debit Long-Term Investments-HTM, $75,000; credit Cash, $75,000.
B. debit Cash, $6,000; credit, Unrealized Gain-Equity, $6,000.
C. debit Cash, $75,000; credit Long-Term Investments—HTM, $75,000.
D. debit Unrealized Gain-Equity, $6,000; credit Cash, $6,000.
E. debit Cash, $75,000; credit Long-Term Investments—Trading, $75,000.
72. Griggs Company holds $50,000 of 8% bonds as a held-to-maturity security. Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?
A. debit Cash, $4,000; credit Long-Term Investments—HTM, $4,000.
B. debt Cash, $2,000; credit Long-Term Investments—HTM, $2000.
C. debit Cash, $2,000; credit Interest Revenue, $2,000.
D. debit Unrealized Gain-Equity, $2,000; credit Cash, $2,000.
E. debit Cash, $4,000; credit Unrealized Gain-Equity, $4,000.
73. Accounting for long-term investments in equity securities with controlling influence uses the:
A. Controlling method.
B. Equity method with consolidation.
C. Investor method.
D. Investment method.
E. Consolidated method.
74. The controlling investor is called the:
A. Owner.
B. Subsidiary.
C. Parent.
D. Investee.
E. Senior entity.
75. A controlling influence over the investee is based on the investor owning voting stock exceeding:
A. 10%.
B. 20%.
C. 30%.
D. 40%.
E. 50%.
76. Long-term investments can include:
A. Held-to-maturity debt securities.
B. Available-for-sale debt securities.
C. Available-for-sale equity securities.
D. Equity securities giving an investor significant influence over an investee.
E. All of these.
77. Consolidated financial statements:
A. Show the results of operations, cash flows, and the financial position of all entities under a parent’s control.
B. Show the results of operations, cash flows, and the financial position of the parent only.
C. Show the results of operations, cash flows, and the financial position of the subsidiary only.
D. Include the investments account on the balance sheet.
E. Do not include a balance sheet.
78. Comprehensive income includes
A. Revenues and expenses reported in the income statement.
B. Gains and losses reported in the income statement.
C. Unrealized gains and losses on long-term available-for-sale securities.
D. All changes in equity for a period except those due to investments and distributions to owners.
E. All of these.
79. Short-term investments in held-to-maturity debt securities are accounted for using the:
A. Fair value method with fair value adjustment to income.
B. Fair value method with fair value adjustment to equity.
C. Cost method with amortization.
D. Cost method without amortization.
E. Equity method.
80. Long-term investments in held-to-maturity debt securities are accounted for using the:
A. Fair value method with fair value adjustment to income.
B. Fair value method with fair value adjustment to equity.
C. Cost method with amortization.
D. Cost method without amortization.
E. Equity method.
