16897655
Question 1
Answer
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. investments of $110,850.
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unrealized loss of $19,750.
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investments of $91,100
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dividend revenue of $3,290
Question 2
Answer
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gain on sale of investment of $19,900.
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. unrealized gain of $19,900.
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dividend revenue of $3,290
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investments of $89,050.
Question 3
Question
. Dividends received on an equity-method investment
Answer
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increase the investment account
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increase dividend revenue.
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decrease the investment account.
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increase owners’ equity
Question 4
Question
The starting point in accounting for all investments is
Answer
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equity value.
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cost.
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c. market value on the Balance-Sheet date.
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cost minus dividends.
Question 5
Question
Consolidation accounting
Answer
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combines the accounts of the parent company and those of the subsidiary companies.
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eliminates all liabilities
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reports the receivables and payables of the parent company only
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all of the above.
Question 6
Question
On January 1, 20X0, Maxspace, Inc., purchased $100,000 face value of the 5% bonds
of Mail Frontier, Inc., at 107. The bonds mature on January 1, 20X5. For the year ended
December 31, 20X5, Maxspace received cash interest of
Answer
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. $2,000
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$3,000.
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$4,000
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$5,000
Question 7
Question
Return to Maxspace, Inc.’s bond investment in the preceding question. For the year
ended December 31, 20X3, Maxspace received cash interest of $5,000. What was the interest
revenue that Maxspace earned in this period?
Answer
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$5,000
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$3,600
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$7,000
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$2,000
Question 8
Question
Providence Systems purchased inventory on account from Megasonic. The price was
¥80,000, and a yen was quoted at $0.0088. Providence paid the debt in yen a month later, when
the price of a yen was $0.0093. Providence
Answer
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debited Inventory for $744
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recorded a Foreign Currency Transaction Gain of $40.
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. debited Inventory for $704.
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none of the above.
Question 9
Question
One way to prevent a foreign currency transaction loss is to
Answer
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. offset foreign currency inventory and PPE.
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pay debts as late as possible.
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pay in the foreign currency.
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collect in your currency.
Question 10
Question
Foreign currency transaction gains and losses are reported on the
Answer
-
. consolidation worksheet.
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Income Statement.
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statement of cash flows
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. Balance Sheet.
Question 11
Question
Consolidation of a foreign subsidiary usually results in a
Answer
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gain or loss on consolidation.
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foreign currency translation adjustment.
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foreign currency transaction gain or loss.
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LIFO/FIFO difference.
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