Question 1

Landmark Corp.buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the five year life.The journal entry to record the purchase should include:

Accepted Answer

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.F) A) and B)
G) A) and C)

Question 2

When an investor company owns more than 25% of the voting stock of an investee company,it has a controlling influence.

Accepted Answer

A) True 
 B)False

Question 3

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

Accepted Answer

A) True 
 B)False

Question 4

When a U.S.company makes a credit sale to an international customer and the sale terms are for payment in a foreign currency,the foreign exchange rate used to record the sale is the exchange rate:

Accepted Answer

A)  Thirty days from the date of sale.
B)  At the end of the seller's fiscal year.
C)  At the end of the buyer's fiscal year.
D)  On the date final payment is made.
E)  On the date of the sale.F) A) and B)
G) A) and C)

Question 5

When consolidated financial statement are prepared,the parent company uses the equity method and reports the investment accounts for the subsidiaries on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)  Fair value method with fair value adjustment to income.
B)  Fair value method with fair value adjustment to equity.
C)  Cost method without amortization.
D)  Cost method with amortization.
E)  Equity method.F) B) and D)
G) A) and E)

Question 7

Comprehensive income includes all except:

Accepted Answer

A)  Revenues and expenses reported in the income statement.
B)  Dividends paid to shareholders.
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)  Gains and losses reported in the income statement.F) C) and E)
G) A) and D)

Question 8

A company had net income of $43,000,net sales of $380,500,and average total assets of $220,000.Its profit margin and total asset turnover were,respectively:

Accepted Answer

A)  11.3%;1.73.
B)  11.3%;19.5.
C)  1.7%;19.5.
D)  1.7%;11.3.
E)  19.5%;11.3.F) A) and B)
G) A) and C)

Exam 15: Investments and International Operations

A company had net income of $43,000,net sales of $380,500,and average total assets of $220,000.Its profit margin and total asset turnover were,respectively:

Correct Answer
verified

When a U.S.company makes a credit sale to an international customer and the sale terms are for payment in a foreign currency,the foreign exchange rate used to record the sale is the exchange rate:

Correct Answer
verified

When an investor company owns more than 25% of the voting stock of an investee company,it has a controlling influence.

Correct Answer
verified

Landmark Corp.buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the five year life.The journal entry to record the purchase should include:

Correct Answer
verified

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

Correct Answer
verified

When consolidated financial statement are prepared,the parent company uses the equity method and reports the investment accounts for the subsidiaries on the balance sheet.

Correct Answer
verified

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

Correct Answer
verified

Comprehensive income includes all except:

Correct Answer
verified

Exam 15: Investments and International Operations

A company had net income of $43,000,net sales of $380,500,and average total assets of $220,000.Its profit margin and total asset turnover were,respectively:

Correct AnswerverifiedShow Answer

When a U.S.company makes a credit sale to an international customer and the sale terms are for payment in a foreign currency,the foreign exchange rate used to record the sale is the exchange rate:

Correct AnswerverifiedShow Answer

When an investor company owns more than 25% of the voting stock of an investee company,it has a controlling influence.

Correct AnswerverifiedShow Answer

Landmark Corp.buys $300,000 of Schroeter Company's 8% five-year bonds payable at par value on September 1.Interest payments are made semiannually.Landmark plans to hold the bonds for the five year life.The journal entry to record the purchase should include:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When consolidated financial statement are prepared,the parent company uses the equity method and reports the investment accounts for the subsidiaries on the balance sheet.

Correct AnswerverifiedShow Answer

When the cost of a short-term held-to-maturity debt security is different from the maturity value,the difference is amortized over the remaining life of the security.

Correct AnswerverifiedShow Answer

Comprehensive income includes all except:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified