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Exam 15: Investments and International Operations

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Question 51

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Explain how available-for-sale debt and equity securities are accounted for at and after acquisition and how they are reported in financial statements.

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Available-for-sale debt and equity secur...

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Question 52

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Explain how to record the sale of trading securities.

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When trading securities are sold,the dif...

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Question 53

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Schoodic Company had the following long-term available-for-sale securities in its portfolio at December 31 for each of the years listed.The year-end cost and fair values for its portfolio follow.Beginning with Year 1,prepare the appropriate journal entry to record each year-end market adjustment for these securities.

A U.S.company makes a sale to a foreign customer payable in 30 days in the customer's currency.The sale would be recorded by the U.S.company on the date:

Held-to-maturity securities are ____________ securities a company intends and is able to hold until maturity.

On October 31,Mayfair Co.received cash dividends of $0.15 per share from its investment in Carter Corp.'s common stock.Mayfair owned 1,200 shares of Carter Corp.'s stock on October 31.The investment is considered available-for-sale.Prepare the investor's journal entry to record the receipt of the cash dividends.

Select the correct statement from the following:

Eaton Company had the following long-term available-for-sale securities in its portfolio at December 31,Year 1.Eaton had several long-term investment transactions during the next year.After analyzing the effects of each transaction,(1)determine the amount Eaton should report on its December 31,Year 1 balance sheet for its long-term investments in available-for-sale securities,(2)determine the amount Eaton should report on its December 31,Year 2 balance sheet for its long-term investments in available-for-sale securities,(3)prepare the necessary adjusting entry to record the fair value adjustment at December 31,Year 2.

Investments in debt and equity securities that the company actively manages and trades for profit are referred to as short-term investments in:

Long-term investments in held-to-maturity debt securities are accounted for using the:

Columbia Corp.held 1,500 of Vianco common stock with a cost of $74,387.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $55,275.Prepare the journal entry to record this sale.

On January 2,Froxel Company purchased 10,000 shares of Sandia Corp.common stock at $19 per share plus a $3,000 commission.This represents 30% of Sandia Corp.'s outstanding stock.On August 6,Sandia Corp.declared and paid cash dividends of $1.75 per share,and on December 31 it reported net income of $150,000.Prepare the necessary entries for Froxel to account for these transactions and events.

On March 15,Carter Company purchased 10,000 shares of Tonya Corp.stock for $35,000.The investment is classified as available-for-sale securities.On June 30,the stock had a fair value of $38,000.Carter should do all of the following except:

A company reported net income for Year 1 of $98,000 and $106,000 for Year 2.It also reported net sales of $735,000 in Year 1 and $798,000 in Year 2.The company's average total assets in Year 1 were $1,850,000 and $1,720,000 in Year 2.Calculate the company's profit margin,total asset turnover and return on total assets for Year 1and Year 2.Comment on the results.

Vans purchased 40,000 shares of Skechs common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

Short-term investments are intended to be converted into cash within the longer of one year or the current operating cycle of the business,and are readily convertible to cash.

Unrealized gains and losses on trading securities are reported on the income statement.

An investor presumed to have significant influence owns as least 20% but not more than 50% of another company's voting stock.

On January 1,2011,Freder Corporation purchased 7,500 shares of SportTech as a long-term investment for a total of $235,000.The 7,500 shares represent 30% of the outstanding (25,000)shares of SportTech.Prepare the journal entries for Freder to record the following transactions and events:

Foreign exchange rates fluctuate due to changes in: