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Weston Company had the following long-term available-for-sale securities in its portfolio at December 31, Year 1. Weston had several long-term investment transactions during the next year. After analyzing the effects of each transaction, (1) determine the amount Weston should report on its December 31, Year 1 balance sheet for its long-term investments in available-for-sale securities, (2) determine the amount Weston 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. Weston Company had the following long-term available-for-sale securities in its portfolio at December 31, Year 1. Weston had several long-term investment transactions during the next year. After analyzing the effects of each transaction, (1) determine the amount Weston should report on its December 31, Year 1 balance sheet for its long-term investments in available-for-sale securities, (2) determine the amount Weston 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. Weston Company had the following long-term available-for-sale securities in its portfolio at December 31, Year 1. Weston had several long-term investment transactions during the next year. After analyzing the effects of each transaction, (1) determine the amount Weston should report on its December 31, Year 1 balance sheet for its long-term investments in available-for-sale securities, (2) determine the amount Weston 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.

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blured image blured image blured image Year 1: $1,307,300 - $1,284,000 = $23...

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Scotsland Company had the following transactions relating to investments in trading securities during the year. Prepare the required general journal entries for these transactions. Scotsland Company had the following transactions relating to investments in trading securities during the year. Prepare the required general journal entries for these transactions.

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A company had a profit margin of 10.5% and total asset turnover of 1.84. Its return on total assets was:


A) 5.71%
B) 8.66%
C) 12.34%
D) 13.61%
E) 19.32%

F) B) and C)
G) None of the above

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On January 3, Kostansas Corporation purchased 5,000 shares of Morton, Inc. for $40 per share plus $700 in broker commissions. These shares represent a 40% ownership in Morton, Inc. Prepare the journal entry Kostansas Corporation should record for the receipt of cash dividends of $2 per share from Morton on July 10.

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

A) True
B) False

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Identify each of the following investments as either in debt (D) securities or equity (E) securities: Identify each of the following investments as either in debt (D) securities or equity (E) securities:

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1. E, 2. D, 3. E, 4....

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On May 1 of the current year, a company paid $200,000 cash to purchase 6%, 10-year bonds with a par value of $200,000; interest is paid semiannually each May 1 and November 1. The company intends to hold these bonds until they mature. Prepare the journal entry for the accrual of interest for the year-end December 31.

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All of the following statements regarding accounting for trading securities under U.S. GAAP are true except:


A) The entire portfolio of trading securities is reported at fair value.
B) An unrealized gain or loss from a change in fair value is reported on the income statement.
C) A realized gain or loss is recorded when the securities are sold and reported on the income statement.
D) When the period-end fair value adjustment for the portfolio of trading securities is computed, it includes the cost and fair value of any securities sold.
E) Any prior period fair value adjustment to the portfolio is not used to compute the gain or loss from sale of individual transactions.

F) A) and D)
G) A) and C)

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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.

F) B) and E)
G) C) and D)

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Equity securities reflect a creditor relationship such as investments in notes, bonds, and certificates of deposit.

A) True
B) False

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

A) True
B) False

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Financial statements that show the financial position, results of operations, and cash flows of all entities under the parent company's control, including all subsidiaries are known as:


A) Combined financial statements
B) Consolidated financial statements
C) Equity financial statements
D) Statement of owner's equity
E) Investor financial statements

F) A) and E)
G) C) and E)

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Debt securities are recorded at cost when purchased.

A) True
B) False

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All of the following statements regarding accounting for noninfluential securities under U.S. GAAP and IFRS are true except:


A) Trading securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income.
B) Trading securities are accounted for using fair values with unrealized gains and losses reported in net income.
C) Available-for-sale securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income.
D) Held-to-maturity securities are accounted for using amortized cost.
E) Both systems examine held-to-maturity securities for impairment.

F) A) and D)
G) D) and E)

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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:


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 D)
G) B) and D)

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Define the return on total assets and explain how it is used to measure a company's financial performance.

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The return on total assets is calculated...

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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:


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 C)
G) A) and B)

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Consolidated financial statements:


A) Show the results of operations, cash flows, and the financial position of all entities under a parent's control, including all subsidiaries.
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 in the subsidiaries on the balance sheet.
E) Do not include a balance sheet.

F) A) and C)
G) C) and E)

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Roe Corporation owns 2,000 shares of WRJ Corporation stock. WRJ Corporation has 25,000 shares of stock outstanding. WRJ paid $4 per share in cash dividends to its stockholders. The entry to record the receipt of these dividends is:


A) Debit Cash, $8,000; credit Long-Term Investments, $8,000.
B) Debt Long-Term Investment, $8,000; credit Cash, $8,000.
C) Debit Cash, $8,000; credit Dividend Revenue, $8,000.
D) Debit Unrealized Gain-Equity, $8,000; credit Cash, $8,000.
E) Debit Cash, $8,000; credit Unrealized Gain-Equity, $8,000.

F) B) and C)
G) B) and D)

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Investments in trading securities are always classified as ______________ and are reported as _______________ on the balance sheet.

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short-term...

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