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Test Bank for Advanced Accounting 4th Edition by Hamlen ; complete solution
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Test Bank for Advanced Accounting 4th Edition by Hamlen ; complete solution
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TESTdBANKdCHAPTERd
1
IntercorporatedInvestments:d And Overview
MULTIPLEdCHOICE
1. Topic:dAccountingdfordequitydsecuritiesdwithdnodsignificantdinfluence
dLOd1
Adcompanydinvestsd$300,000dindequitydsecuritiesdondNovemberd30,d2019,danddclassifiesdthemdas
dinvestmentsdwithdnodsignificantdinfluence.d AtdDecemberd31,d2019,dthedcompany’sdyear-
end,dthedsecuritiesdhavedadfairdvaluedofd$310,000.d OndFebruaryd1,d2020,dthedcompanydsellsdtheds
ecuritiesdford$295,000.
Whichdstatementdisdtruedregardingdhowdthisdinformationdisdreporteddindthedcompany’sdfinancial
dstatements?
a. Thedcompany’sdDecemberd31,d2019dbalancedsheetdreportsdthedsecuritiesdatd$300,000,
danddadgaindofd$10,000disdreporteddondthed2019dincomedstatement.
b. Thedcompany’sdDecemberd31,d2019dbalancedsheetdreportsdthedsecuritiesdatd$310,000,
danddadlossdofd$5,000disdreporteddondthed2020dincomedstatement.
c. Thedcompany’sdDecemberd31,d2019dbalancedsheetdreportsdthedsecuritiesdatd$310,000,
danddadlossdofd$15,000disdreporteddondthed2020dincomedstatement.
d. Thedcompany’sdDecemberd31,d2019dbalancedsheetdreportsdthedsecuritiesdatd$300,000,
danddnodgaindordlossdappearsdondthed2019dincomedstatement.
ANS:d d c
2. Topic:dAccountingdfordequitydsecuritiesdwithdnodsignificantdinfluence
dLOd1
Whichdstatementdisdtruedconcerningdthedreportingdfordequitydinvestmentsdwithdnodsignificantdinflu
ence?
a. Theydaredreporteddatdfairdvalue,dwithdanydchangesdindvaluedreporteddindincome.
b. Theydaredcategorizeddasdeitherdtradingdordavailable-for-
sale,dwithdunrealizeddchangesdindthedvaluedofdtradingdsecuritiesdreporteddindincome,dan
ddunrealizeddchangesdindthedvaluedofdAFSdsecuritiesdreporteddindOCI.
c. Theydaredreporteddatdcost,dwithdunrealizeddchangesdindvaluedreporteddindOCI.
d. Theydaredreporteddatdfairdvalue,dwithdunrealizeddchangesdindvaluedreporteddindOCI.
dANS: a
, Usedthedfollowingdinformationdondadcompany’sdinvestmentsdindequitydsecuritiesdwithdnodsignifi
cantdinfluencedtodanswerdQuestionsd3dandd4.d Thedcompany’sdaccountingdyeardendsdDecemberd3
1.
DatedofdAc FairdValue Date Selling
Investment quisition Cost d12/31/1 dSol dPrice
9 d
ColtdCompanydstock 9/20/19 $38,000 $37,000 2/10/20 $42,000
DanadCompanydstock 10/2/19 14,000 14,200 1/17/20 13,000
3. Topic:dAccountingdfordequitydinvestmentsdwithdnodsignificantdinfluence
dLOd1
Whatdamountdisdreporteddfordgaindordlossdondthesedsecuritiesdind2019dincome?
a. Nodgaindordloss
b. $800dloss
c. $3,000dgain
d. $1,000dloss
ANS: b
($37,000d–d$38,000)d+d($14,200d–d$14,000)d=d$800dloss
4. Topic:dAccountingdfordequitydinvestmentsdwithdnodsignificantdinfluence
dLOd1
Whatdamountdisdreporteddfordgaindordlossdondthesedsecuritiesdind2020dincome?
a. Nodgaindordloss
b. $3,000dgain
c. $3,800dgain
d. $4,000dgain
ANS: c
($42,000d–d$37,000)d+d($13,000d–d$14,200)d=d$3,800dgain
5. Topic:dAccountingdfordequitydinvestmentsdwithdnodsignificantdinfluence
dLOd1
Adcompanydbuysdandequitydinvestmentdford$100dind2020.d Thedinvestmentdhasdnodsignificantdinflu
ence.d Atdthedenddofd2020,dthedcompanydstilldholdsdthedinvestmentdandditdhasdadmarketdvaluedofd$1
15.d Ind2021,dthedcompanydsellsdthedinvestmentdford$108.
Howdisdthisdinformationdreporteddindthedcompany’sd2020dandd2021dincomedstatements?
a. $15dgaindondthed2020dincomedstatement;d$7dlossdondthed2021dincomedstatement.
b. Doesdnotdappeardondthed2020dincomedstatement;d$8dgaindondthed2021dincomedstatement.
c. Doesdnotdappeardondthed2020dincomedstatement;d$7dlossdondthed2021dincomedstatement.
d. $8dgaindondthed2020dincomedstatement;ddoesdnotdappeardondthed2021dincomedstatement.
ANS: a
,6. Topic:dAccountingdfordequitydinvestmentsdwithdnodsignificantdinfluence
LOd1
OndDecemberd20,d2020,dadcompanydpaysd$40,000dfordandinvestmentdindequitydsecuritiesdwithdnod
significantdinfluence.d OndDecemberd31,d2020,dthedcompany’sdyear-
end,dthedstockdhasdadmarketdvaluedofd$37,000.d Thedcompanydsellsdthedstockdind2021dford$44,000.
Onditsdincomedstatement,dthedcompanydreports:
a. Adlossdofd$3,000dind2020,danddadgaindofd$7,000dind2021
b. Nodgaindordlossdind2020,danddadgaindofd$4,000dind2021
c. Adgaindofd$4,000dind2020,danddnodgaindordlossdind2021
d. Nodgaindordlossdind2020,danddadgaindofd$7,000dind2021
dANS: a
7. Topic:dAccountingdfordequitydinvestmentsdwithdnodsignificantdinfluence
dLOd1
OndOctoberd25,d2020,dadcompanydpaysd$35,000dfordandinvestmentdindequitydsecurities,dwithdnodsi
gnificantdinfluence.d OndDecemberd31,d2020,dthedcompany’sdyear-
end,dthedstockdasdadmarketdvaluedofd$36,000.d Thedcompanydsellsdthedstockdind2021dford$32,000.d H
owdisdthedcompany’sd2020dotherdcomprehensivedincomedaffecteddbydthedabovedtransactionsdindea
chdyear?
a. Increasedofd$1,000dind2020,ddecreasedofd$1,000dind2021
b. Increasedofd$1,000dind2020,ddecreasedofd$4,000dind2021
c. Nodeffectdind2020,ddecreasedofd$3,000dind2021
d. NodeffectdondOCIdindeitherdyear.
ANS:d d d
Usedthedfollowingdinformationdondadcompany’sdinvestmentsdinddebtdsecuritiesdtodanswerdQuesti
onsd8d-d11.d Thedcompany’sdaccountingdyeardendsdDecemberd31.
Datedof FairdValue Date Selling
Investment Acquisition Cost 12/31/19 Sold Price
ColtdCompanydbonds 9/20/19 $38,000 $37,000 2/10/20 $42,000
DanadCompanydbonds 10/2/19 14,000 14,200 1/17/20 13,000
8. Topic:dAccountingdforddebtdinvestmentsdclassifieddasdtrading
dLOd1
Ifdthedaboveddebtdinvestmentsdaredcategorizeddasdtradingdsecurities,dwhatdamountdisdreporteddfor
dgaindordlossdondsecuritiesdind2019dincome?
a. Nodgaindordloss
b. $800dloss
c. $3,000dgain
d. $200dgain
ANS: b
($37,000d-d$38,000)d+d($14,200d-d$14,000)d=d$(800)dloss
, 9. Topic:dAccountingdforddebtdinvestmentsdclassifieddasdtrading
LOd1
Ifdthedaboveddebtdinvestmentsdaredcategorizeddasdtradingdsecurities,dwhatdamountdisdreporteddfor
dgaindordlossdondsecuritiesdind2020dincome?
a. Nodgaindordloss
b. $3,000dgain
c. $3,800dgain
d. $5,000dgain
ANS: c
($42,000d-d$37,000)d+d($13,000d-d$14,200)d=d$3,800dgain
10. Topic:dAccountingdforddebtdinvestmentsdclassifieddasdAFS
dLOd1
Ifdthedabovedinvestmentsdaredcategorizeddasdavailable-for-
saledsecurities,dwhatdamountdisdreporteddfordgaindordlossdondsecuritiesdind2019dincome?
a. Nodgaindordloss
b. $800dloss
c. $3,000dgain
d. $200dgain
ANS: a
11. Topic:dAccountingdforddebtdinvestmentsdclassifieddasdAFS
dLOd1
Ifdthedabovedinvestmentsdaredcategorizeddasdavailable-for-
saledsecurities,dwhatdamountdisdreporteddasdgaindordlossdondsecuritiesdind2020dincome?
a. $3,000dgain
b. $3,800dgain
c. $2,100dgain
d. $3,100dgain
ANS: a
($42,000d–d$38,000)d+d($13,000d–d$14,000)d=d$3,000dgain
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