Investment MCQs

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Nichols Enterprises has an investment in 25,000 shares of Elliott Electronics that Nichols accounts for as a security available for sale. Elliott shar...






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Anthers Inc. bought the following portfolio of trading securities near the end of 2011. (FV = Fair Value) SecA: Cost:80k FV(12/31/11): 84k SecB: Cos...






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On January 1, 2011, Nana Company paid $100,000 for 8,000 shares of Papa Company common stock. These securities were classified as trading securities. ...






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Goofy Inc. bought 15,000 shares of Crazy Co.’s stock for $150,000 on May 5, 2010, and classified the stock as available for sale. The market value o...






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Hobson Company bought the securities listed below during 2010. These securities were classified as trading securities. In its December 31, 2010, incom...






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What is the effect on a company’s cash flows and reported profit from accounting for an investment as a trading security versus as an available-for-...






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All investments in debt and equity securities that don’t fit the definitions of the other reporting categories are classified as:






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Investments in securities available for sale are reported at:






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All investment securities are initially recorded at:






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GAAP regarding accounting for certain debt and equity securities generally will apply to an investment when the percentage of ownership of another com...






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When an investor classifies an investment in common stock as securities available for sale, cash dividends are classified by the investor as:






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Investments in securities to be held for an unspecified period of time are reported at:






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Unrealized holding gains and losses on securities available for sale would have the following effects on retained earnings:






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Janet Jones, an analyst with All Purpose Heater Company, plans to use a Monte Carlo experiment to estimate the simulated daily demand for All Purpose...






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Logan Corporation, located in Boston, has experienced major distribution problems in supplying key Los Angeles-based customers. Delivery times have ...






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Debrock Corporation has an option to abandon one of its capital investment projects. The option to abandon makes Debrock the






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Hawk Corporation purchased 10,000 shares of Diamond Corporation stock in 2008 for $50 per share and classified the investment as securities available ...






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Dim Corporation purchased 1,000 shares of Witt Corporation stock in 2008 for $800 per share and classified the investment as securities available for ...






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On January 1, 2011, Everglade Company purchased the following securities and properly accounted for them as securities available for sale: (FV = Fair...






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Boulter, Inc. began business on January 1, 2011. At the end of December 2011, Boulter had the following investments in equity securities: (FV = Fair V...






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A weakness of ___(insert from choices below)____ is that firms can increase or decrease net income by choosing to sell particular investments with net...






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If an available-for-sale investment is sold for which there are unrealized gains in accumulated other comprehensive income (AOCI), a reclassification ...






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If an available-for-sale investment is sold for which there are unrealized losses in accumulated other comprehensive income (AOCI), the total effect o...






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Seybert Systems accounts for its investment in Wang Engineering as available for sale. Seybert’s balance in accumulated other comprehensive income w...






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Sloan Company has owned an investment during 2011 that has increased in fair value. After all closing entries for 2011 are completed, the effect of th...






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When investments are treated as available-for-sale, other comprehensive income (OCI) also includes the tax effects associated with unrealized holding ...






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The Guitar World (TGW) holds an investment that increased in fair value over 2011, and accounts for that investment as available for sale. When consid...






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The equity method of accounting for investments in voting common stock is appropriate when:






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Consolidated financial statements are prepared when one company has:






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If Pop Company owns 15% of the common stock of Son Company, then Pop Company typically:






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If Pop Company exercises significant influence over Son Company and owns 40% of its common stock, then Pop Company:






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When using the equity method to account for an investment, cash dividends received by the investor from the investee should be recorded:






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When the equity method of accounting for investments is used by the investor, the investment account is increased when:






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Which of the following increases the investment account under the equity method of accounting?






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If the fair value of equity securities is not determinable and the equity method is not appropriate, the securities should be reported at:






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When the investor’s level of influence changes, it may be necessary to change from the equity method to another method. When the level of ownership ...






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On July 1, 2011, Tremen Corporation acquired 40% of the shares of Delany Company. Tremen paid $3,000,000 for the investment, and that amount is exactl...






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Which of the following is not true about accounting for investments under IFRS?






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Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investment at $150,000 and $1...






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Jack Corporation purchased a 20% interest in Jill Corporation for $1,500,000 on January 1, 2011. Jack can significantly influence Jill. On December 10...






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Hope Company bought 30% of Faith Corporation in 2011. Hope’s purchase price equaled 30% of the book value of Faith’s net identifiable assets, whic...






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Sox Corporation purchased a 40% interest in Hack Corporation for $1,500,000 on Jan 1, 2011. On November 1, 2011, Hack declared and paid $1 million in ...






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Assume that, on 1/1/11, Matsui Co. paid $1,200,000 for its investment in 60,000 shares of Yankee Inc. Further, assume that Yankee has 200,000 total sh...






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Gerken Company concluded at the beginning of 2011 that the company’s ownership interest in DillCo had increased to the point that it became appropri...






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On April 1, 2011, BigBen Company acquired 30% of the shares of LittleTick, Inc. BigBen paid $100,000 for the investment, which is $40,000 more than 30...






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Cucumber Company concluded at the beginning of 2011 that the company’s ownership interest in PickelCo had decreased to the point that it became appr...





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When the equity method of accounting for investments is used by the investor, the amortization of additional depreciation due to differences between b...






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On January 1, 2011, Green Corporation purchased 20% of the outstanding voting common stock of Gold Company for $300,000. The book value of the acquire...






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At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $45 million. At the time of purchase, the carrying value of Sky Tech’...






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The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is:






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Assume that, on 1/1/11, Sosa Enterprises paid $5,100,000 for its investment in 36,000 shares of Orioles Co. Further, assume that Orioles has 120,000 t...






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Smith buys and sells securities which it typically classifies as available for sale. On December 15, 2011, Smith purchased $500,000 of Jones shares, a...






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Which of the following is not true about the fair value option?






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Which of the following is not true when the fair value option is elected for an investment that would normally be accounted for under the equity metho...






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Under IAS No. 39: which is not a category for accounting for investments?






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Under IFRS No. 9: which is not a category for accounting for investments?






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Which of the following is NOT true about the "fair value through profit and loss" approach for accounting for investments under IFRS?






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Which of the following is NOT true about the "fair value through other comprehensive income" approach for accounting for investments under IFRS No. 9?...






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Wang Corporation purchased $100,000 of Hales Inc 6% bonds at par with the intent and ability to hold the bonds until they matured in 2015, so Wang cla...






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If the fair value of a held-to-maturity investment declines for a reason that is viewed as "other than temporary" because the company intends to sell ...






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If the fair value of a held-to-maturity investment declines for a reason that is viewed as "other than temporary" because the company has incurred a c...






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If the fair value of a trading security declines for a reason that is viewed as "other than temporary",






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When an impairment of an equity investment that is classified as available for sale occurs for a reason that is judged to be "other than temporary," t...






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An OTT impairment for an equity investment is recognized if fair value declines below amortized cost and






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If the fair value of a debt investment that is classified as an available-for-sale investment declines for a reason that is viewed as "other than temp...






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If the fair value of a debt investment that is classified as an available-for-sale investment declines for a reason that is viewed as "other than temp...






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Which of the following is NOT a reason to consider a decline in the fair value of a debt investment to be "other than temporary"?






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Nichols Corporation purchased $100,000 of Holly Inc 6% bonds at par with the intent and ability to hold the bonds until they matured in 2015, so Nicho...






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Nichols Corporation purchased $100,000 of Holly Inc 6% bonds at par with the intent and ability to hold the bonds until they matured in 2015, so Nicho...






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Nichols Corporation purchased $100,000 of Holly Inc 6% bonds at par with the intent and ability to hold the bonds until they matured in 2015, so Nicho...






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Dicker Furriers purchased one thousand shares of Loose Corporation stock on January 10, 2010, for $800 per share and classified the investment as secu...






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Which of the following is not an example of a derivative?






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Which of the following is not true about derivatives?






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Capital investments require balancing risk and return. Managers have a responsibility to ensure that the investments that they make in their own firms...






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Transactions in debt and shareholder equity are typically handled by:






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"Off the balance sheet" means that:






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Which of the following is not normally associated with the Finance and Investment Cycle?






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Accounting estimates include which of the following:






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Who is responsible for making accounting estimates?