9/14/23,g11:21gA TestgBankgandgSolutionsgForgAdvancedgAccountingg4thgEditiongbygSusan
M gH…
ForgAllgChaptersg :g tbdotsm@gmail.c
om TESTgBAN
Kg CHAPT
ERg1
IntercorporategInvestments:gAngOverview
MULTIPLEg CHOICE
1. Topic:gAccountinggforgequitygsecuritiesgwithgnogsignificantginflu
enceg LOg1
Agcompanyginvestsg$300,000gingequitygsecuritiesgongNovemberg30,g2019,gandgclassifiesgthemg
as
investmentsgwithgnogsignificantginfluence.g AtgDecemberg31,g2019,gthegcompany’sgyear-
end,gtheg securitiesghavegagfairgvaluegofg$310,000. g OngFebruaryg1,g2020,gthegcompany
gsellsgthegsecuritiesg forg$295,000.
Whichgstatementgisgtruegregardingghowgthisginformationgisgreportedgingthegcompany’sg
financialg statements?
a. Thegcompany’sgDecemberg31,g2019gbalancegsheetgreportsgthegsecuritiesgatg$300,0
00,gandg aggaingofg$10,000gisgreportedgongtheg2019gincomegstatement.
b. Thegcompany’sgDecemberg31,g2019gbalancegsheetgreportsgthegsecuritiesgatg$310,0
00,gandg aglossgofg$5,000gisgreportedgongtheg2020gincomegstatement.
c. Thegcompany’sgDecemberg31,g2019gbalancegsheetgreportsgthegsecuritiesgatg$310,0
00,gandg aglossgofg$15,000gisgreportedgongtheg2020gincomegstatement.
d. Thegcompany’sgDecemberg31,g2019gbalancegsheetgreportsgthegsecuritiesgatg$300,0
00,gandg noggaingorglossgappearsgongtheg2019gincomegstatement.
ANS:g g c
2. Topic:gAccountinggforgequitygsecuritiesgwithgnogsignificantginflu
enceg LOg1
Whichgstatementgisgtruegconcerninggthegreportinggforgequityginvestmentsgwithgnogsignific
antg influence?
a. Theygaregreportedgatgfairgvalue,gwithganygchangesgingvaluegreportedgingincome.
b. Theygaregcategorizedgasgeithergtradinggorgavailable-for-
sale,gwithgunrealizedgchangesging thegvaluegofgtradinggsecuritiesgreportedginginc
ome,gandgunrealizedgchangesgingthegvalueg ofgAFSgsecuritiesgreportedgingOCI.
c. Theygaregreportedgatgcost,gwithgunrealizedgchangesgingvaluegreportedgingOCI.
d. Theygaregreportedgatgfairgvalue,gwithgunrealizedgchangesgingvaluegreported
gingOCI.g ANS:g a
ForgMoregInfog:
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M gH…
Usegthegfollowingginformationgongagcompany’sginvestmentsgingequitygsecuritiesg
withgnog significantginfluencegtoganswerQuestionsg3gandg4.g Thegcompany’sgacco
untinggyeargendsg Decemberg31.
Dategof FairgValue Date Selling
Investment Acquisition Cost 12/31/19 Sold Price
ColtgCompanygstock 9/20/19 $38,000 $37,000 2/10/20 $42,000
DanagCompanygstock 10/2/19 14,000 14,200 1/17/20 13,000
3. Topic:gAccountinggforgequityginvestmentsgwithgnogsignificantginflu
enceg LOg1
Whatgamountgisgreportedgforggaingorglossgongthesegsecuritiesging2019gincome?
a. Noggaingorgloss
b. $800gloss
c. $3,000ggain
d. $1,000gloss
ANS:g g b
($37,000g–g$38,000)g+g($14,200g–g$14,000)g=g$800loss
4. Topic:gAccountinggforgequityinvestmentsgwithgnogsignificantginflu
enceg LOg1
Whatgamountgisgreportedgforggaingorglossgongthesegsecuritiesging2020gincome?
a. Noggaingorgloss
b. $3,000ggain
c. $3,800ggain
d. $4,000ggain
ANS:g g c
($42,000g–g$37,000)g+g($13,000g–g$14,200)g=g$3,800ggain
5. Topic:gAccountinggforgequityginvestmentsgwithgnogsignificantginflu
enceg LOg1
Agcompanygbuysgangequityginvestmentgforg$100ging2020.g Theginvestmentghasgnogsignifi
cantg influence.g Atgthegendgofg2020,gthegcompanygstillgholdsgtheginvestmentgandgitghas
gagmarketgvalueg ofg$115.g Ing2021,gthegcompanygsellsgtheginvestmentgforg$108.
Howgisgthisginformationgreportedgingthegcompany’sg2020gandg2021incomegstatements?
a. $15ggaingongtheg2020gincomegstatement;g$7glossgongtheg2021gincomegstatement.
b. Doesgnotgappeargongtheg2020gincomegstatement;g$8ggaingongtheg2021gincomegstatem
ent.
c. Doesgnotgappeargongtheg2020gincomegstatement;g$7glossgongtheg2021incomegstateme
nt.
d. $8ggaingongtheg2020gincomegstatement;gdoesgnotgappeargongtheg2021gincomegstatem
ent.
ANS:g g a
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6. Topic:gAccountinggforgequityginvestmentsgwithgnogsignificantginflu
enceg LOg1
OngDecemberg20,g2020,gagcompanygpaysg$40,000gforganginvestmentgingequitygsecurities
withgnog significantginfluence.g OngDecemberg31,g2020,gthegcompany’sgyear-
end,gthegstockghasgagmarketg valuegofg$37,000.g Thegcompanygsellsgthegstockging2021gf
org$44,000.
Ongitsgincomegstatement,gthegcompanygreports:
a. Aglossgofg$3,000ging2020,gandgaggaingofg$7,000ging2021
b. Noggaingorglossging2020,gandgaggaingofg$4,000ging2021
c. Aggaingofg$4,000ging2020,gandgnoggaingorglossging2021
d. Noggaingorglossging2020,gandgaggaingofg$7,000gi
ng2021g ANS:g a
7. Topic:gAccountinggforgequityginvestmentsgwithgnogsignificantginflu
enceg LOg1
Ong Octoberg 25,g 2020,g ag companyg paysg $35,000g forg ang investmentg ing equityg securities,g wit
hg no
significantginfluence.g OngDecemberg31,g2020,gthegcompany’sgyear-
end,gthegstockgasgagmarketg valuegofg$36,000.g Thegcompanygsellsgthegstockging2021gfor
g$32,000.g Howgisgthegcompany’sg 2020othergcomprehensivegincomegaffectedgbygthegabo
vegtransactionsgingeachgyear?
a. Increasegofg$1,000ging2020,gdecreasegofg$1,000ging2021
b. Increasegofg$1,000ging2020,gdecreasegofg$4,000ging2021
c. Nogeffectging2020,gdecreasegofg$3,000ging2021
d. NogeffectgongOCIgingeithergyear.
ANS:g g d
Usegthegfollowingginformationgongagcompany’sginvestmentsgingdebtgsecuritiestog answe
rQuestionsg8g-g11.g Thegcompany’sgaccountinggyeargendsgDecemberg31.
Dategof FairgValue Date Selling
Investment Acquisition Cost 12/31/19 Sold Price
ColtgCompanygbonds 9/20/19 $38,000 $37,000 2/10/20 $42,000
DanagCompanygbonds 10/2/19 14,000 14,200 1/17/20 13,000
8. Topic:gAccountinggforgdebtginvestmentsgclassifiedgasgtra
dingg LOg1
Ifgthegabovegdebtginvestmentsgaregcategorizedgasg tradinggsecurities,gwhatgamountg isgreported
gfor
gaingorglossgongsecuritiesging2019gincome?
a. Noggaingorgloss
b. $800gloss
c. $3,000ggain
d. $200ggain
ANS:g g b
($37,000g-g$38,000)g+g($14,200g-g$14,000)g=g$(800)gloss
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M gH…
ForgAllgChaptersg :g tbdotsm@gmail.c
om TESTgBAN
Kg CHAPT
ERg1
IntercorporategInvestments:gAngOverview
MULTIPLEg CHOICE
1. Topic:gAccountinggforgequitygsecuritiesgwithgnogsignificantginflu
enceg LOg1
Agcompanyginvestsg$300,000gingequitygsecuritiesgongNovemberg30,g2019,gandgclassifiesgthemg
as
investmentsgwithgnogsignificantginfluence.g AtgDecemberg31,g2019,gthegcompany’sgyear-
end,gtheg securitiesghavegagfairgvaluegofg$310,000. g OngFebruaryg1,g2020,gthegcompany
gsellsgthegsecuritiesg forg$295,000.
Whichgstatementgisgtruegregardingghowgthisginformationgisgreportedgingthegcompany’sg
financialg statements?
a. Thegcompany’sgDecemberg31,g2019gbalancegsheetgreportsgthegsecuritiesgatg$300,0
00,gandg aggaingofg$10,000gisgreportedgongtheg2019gincomegstatement.
b. Thegcompany’sgDecemberg31,g2019gbalancegsheetgreportsgthegsecuritiesgatg$310,0
00,gandg aglossgofg$5,000gisgreportedgongtheg2020gincomegstatement.
c. Thegcompany’sgDecemberg31,g2019gbalancegsheetgreportsgthegsecuritiesgatg$310,0
00,gandg aglossgofg$15,000gisgreportedgongtheg2020gincomegstatement.
d. Thegcompany’sgDecemberg31,g2019gbalancegsheetgreportsgthegsecuritiesgatg$300,0
00,gandg noggaingorglossgappearsgongtheg2019gincomegstatement.
ANS:g g c
2. Topic:gAccountinggforgequitygsecuritiesgwithgnogsignificantginflu
enceg LOg1
Whichgstatementgisgtruegconcerninggthegreportinggforgequityginvestmentsgwithgnogsignific
antg influence?
a. Theygaregreportedgatgfairgvalue,gwithganygchangesgingvaluegreportedgingincome.
b. Theygaregcategorizedgasgeithergtradinggorgavailable-for-
sale,gwithgunrealizedgchangesging thegvaluegofgtradinggsecuritiesgreportedginginc
ome,gandgunrealizedgchangesgingthegvalueg ofgAFSgsecuritiesgreportedgingOCI.
c. Theygaregreportedgatgcost,gwithgunrealizedgchangesgingvaluegreportedgingOCI.
d. Theygaregreportedgatgfairgvalue,gwithgunrealizedgchangesgingvaluegreported
gingOCI.g ANS:g a
ForgMoregInfog:
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,9/14/23,g11:22gA TestgBankgandgSolutionsgForgAdvancedgAccountingg4thgEditiongbygSusan
M gH…
Usegthegfollowingginformationgongagcompany’sginvestmentsgingequitygsecuritiesg
withgnog significantginfluencegtoganswerQuestionsg3gandg4.g Thegcompany’sgacco
untinggyeargendsg Decemberg31.
Dategof FairgValue Date Selling
Investment Acquisition Cost 12/31/19 Sold Price
ColtgCompanygstock 9/20/19 $38,000 $37,000 2/10/20 $42,000
DanagCompanygstock 10/2/19 14,000 14,200 1/17/20 13,000
3. Topic:gAccountinggforgequityginvestmentsgwithgnogsignificantginflu
enceg LOg1
Whatgamountgisgreportedgforggaingorglossgongthesegsecuritiesging2019gincome?
a. Noggaingorgloss
b. $800gloss
c. $3,000ggain
d. $1,000gloss
ANS:g g b
($37,000g–g$38,000)g+g($14,200g–g$14,000)g=g$800loss
4. Topic:gAccountinggforgequityinvestmentsgwithgnogsignificantginflu
enceg LOg1
Whatgamountgisgreportedgforggaingorglossgongthesegsecuritiesging2020gincome?
a. Noggaingorgloss
b. $3,000ggain
c. $3,800ggain
d. $4,000ggain
ANS:g g c
($42,000g–g$37,000)g+g($13,000g–g$14,200)g=g$3,800ggain
5. Topic:gAccountinggforgequityginvestmentsgwithgnogsignificantginflu
enceg LOg1
Agcompanygbuysgangequityginvestmentgforg$100ging2020.g Theginvestmentghasgnogsignifi
cantg influence.g Atgthegendgofg2020,gthegcompanygstillgholdsgtheginvestmentgandgitghas
gagmarketgvalueg ofg$115.g Ing2021,gthegcompanygsellsgtheginvestmentgforg$108.
Howgisgthisginformationgreportedgingthegcompany’sg2020gandg2021incomegstatements?
a. $15ggaingongtheg2020gincomegstatement;g$7glossgongtheg2021gincomegstatement.
b. Doesgnotgappeargongtheg2020gincomegstatement;g$8ggaingongtheg2021gincomegstatem
ent.
c. Doesgnotgappeargongtheg2020gincomegstatement;g$7glossgongtheg2021incomegstateme
nt.
d. $8ggaingongtheg2020gincomegstatement;gdoesgnotgappeargongtheg2021gincomegstatem
ent.
ANS:g g a
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Upload
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M gH…
ForgAllgChaptersg :g
6. Topic:gAccountinggforgequityginvestmentsgwithgnogsignificantginflu
enceg LOg1
OngDecemberg20,g2020,gagcompanygpaysg$40,000gforganginvestmentgingequitygsecurities
withgnog significantginfluence.g OngDecemberg31,g2020,gthegcompany’sgyear-
end,gthegstockghasgagmarketg valuegofg$37,000.g Thegcompanygsellsgthegstockging2021gf
org$44,000.
Ongitsgincomegstatement,gthegcompanygreports:
a. Aglossgofg$3,000ging2020,gandgaggaingofg$7,000ging2021
b. Noggaingorglossging2020,gandgaggaingofg$4,000ging2021
c. Aggaingofg$4,000ging2020,gandgnoggaingorglossging2021
d. Noggaingorglossging2020,gandgaggaingofg$7,000gi
ng2021g ANS:g a
7. Topic:gAccountinggforgequityginvestmentsgwithgnogsignificantginflu
enceg LOg1
Ong Octoberg 25,g 2020,g ag companyg paysg $35,000g forg ang investmentg ing equityg securities,g wit
hg no
significantginfluence.g OngDecemberg31,g2020,gthegcompany’sgyear-
end,gthegstockgasgagmarketg valuegofg$36,000.g Thegcompanygsellsgthegstockging2021gfor
g$32,000.g Howgisgthegcompany’sg 2020othergcomprehensivegincomegaffectedgbygthegabo
vegtransactionsgingeachgyear?
a. Increasegofg$1,000ging2020,gdecreasegofg$1,000ging2021
b. Increasegofg$1,000ging2020,gdecreasegofg$4,000ging2021
c. Nogeffectging2020,gdecreasegofg$3,000ging2021
d. NogeffectgongOCIgingeithergyear.
ANS:g g d
Usegthegfollowingginformationgongagcompany’sginvestmentsgingdebtgsecuritiestog answe
rQuestionsg8g-g11.g Thegcompany’sgaccountinggyeargendsgDecemberg31.
Dategof FairgValue Date Selling
Investment Acquisition Cost 12/31/19 Sold Price
ColtgCompanygbonds 9/20/19 $38,000 $37,000 2/10/20 $42,000
DanagCompanygbonds 10/2/19 14,000 14,200 1/17/20 13,000
8. Topic:gAccountinggforgdebtginvestmentsgclassifiedgasgtra
dingg LOg1
Ifgthegabovegdebtginvestmentsgaregcategorizedgasg tradinggsecurities,gwhatgamountg isgreported
gfor
gaingorglossgongsecuritiesging2019gincome?
a. Noggaingorgloss
b. $800gloss
c. $3,000ggain
d. $200ggain
ANS:g g b
($37,000g-g$38,000)g+g($14,200g-g$14,000)g=g$(800)gloss
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