A company owns 2% of a publicly traded corporation. How should the value of the investment appear on the balance sheet of the investor? O A. at historical cost plus any dividend payments received over the life of the investment O B. at the original purchase price less an amount considered to be unrecoverable impairment OC at fair market value on the balance sheet date OD. at historical cost
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- The underlying equity of an investment at acquisition: Question 6Answer a. Is recorded in the investment account under the equity method b. Is equal to the book value of the investee's net assets times the percentage acquired C. Minus the cost of the investment is assigned to goodwill d. Is equal to the fair value of the investee's net assets times the percentage acquiredestld-253754269¢erwin-yes O 710389- TR 1000 ed Question 3 of 25 The fair value of an investment is the price that Q Search OA. existed at the time of acquisition B. would be received if the company were to sell the investment on the market OC. is not relevant for trading debt investments O D. is always equal to the weighted average cost of the investment L ... hp T T WQUESTION 5 Company X acquired for cash all of the outstanding common stock of Company Y. How should Company X determine in general the amounts to be reported for the inventories and long-term debt acquired from Company Y? Inventories Long-term debt A. Fair value Fair value B. Fair value Recorded value C. Recorded value Fair value D. Recorded value Recorded value Option A Option B Option C Option D
- 63 Analyze the following: I – An entity shall classify a noncurrent asset as held for sale when the carrying amount of the asset is recovered through a sale transaction. II – Noncumulative preference dividends in arrears are not paid and not disclosed. III – In computing basic loss per share, the annual preference dividend on cumulative preference shares should be added to the net loss whether declared or not. Given these, we can conclude that: Group of answer choices Only statement II is true. Only statements I and II are true. Statements I and III are not true. Statements II and III are not false.37. When an entity reduces its interest in an investment in equity securities accounted for by the equity method and changes in to the fair value method. What is the initial measurement of the investment for purposes of subsequent changes in market value? a. Carrying amount at the date of changea. Original costb. Market value at the date of changec. Market value at the date of acquisitionQ7 How are transaction costs associated with the acquisition of financial assets recognized in the financial statements of the acquiring entity? Select one: a. They are always capitalized to increase the value of the financial asset. b. The treatment depends on the classification of the financial asset at acquisition date. c. They are only capitalized if the amortized cost model is used. d. They are always charged in the profit or loss account in the year in which the transaction was made.
- 39. D On January 1, 2019, Caraga Company purchased equity securities to be held as financial assets measured at fair value through other comprehensive income. Market – 12/31/19 3,200,000 3,500,000 4,600,000 Market 12/31/2020 Security R Security S Security T Cost 3,000,000 4,000,000 5,000,000 3,700,000 4,700,000 On January 31, 2020, the entity sold Security R for P3,500,000. What amount should be recognized directly in retained earnings of as a result of the sale of investment in 2020? a. 500,000 b. 300,000 c. 200,000 d. 011. Which type of financial assets are purchased only with the intent of selling them in the near future? DAFVTPL financial assets ⒸBFVTOCI Financial assets C. Amortized Cost financial assets OD. Investment accounted for using the equity methodQUESTION 9 In the case of an investment in equity securities where the investor does not have significant influence and the investment is carried at fair value, a dividend from the investee is: Income to the investor in the period of declaration. A reduction of the carrying amount of the investment. A direct increase to retained earnings of the investor to offset the direct decrease to retained earnings of the investee. An expense to the investor in the period of declaration.
- Which of the following investments is most likely classified as a held-to-maturity investment? a. 80% stock ownership in a subsidiary b. 100% ownership in voting stock of a supplier c. 10-year bonds d. None of the aboveQUESTION 3 Entity A invested in 3,386,000 shares of a listed company on 1 October 2023 at a cost of $3.68 per share. On 31 December 2023, the shares had a market value of $6.94 per share. Entity A is not planning on selling these shares in the short term and elects to hold them as Fair Value through Other Comprehensive Income. REQUIRED: (1) Measure the amounts of the financial asset recognised in the Statement of Financial Position on 31 December 2023. (2) Measure the amounts recognised in the Statement of Profit or Loss for the financial asset of the year 2023. (3) Measure the amounts of the Fair Value Reserve recognised in the Statement of Financial Position on 31 December 2023. ANSWERS: (1) The answer = $ (2) The answer = $ (3) The answer = $ (If it is a gain of $10, enter 10. If it is a loss of $10, enter -10.)Question 19 An investor uses the cost method of accounting for its investment in common stock. During the current year, the investor received $25,000 in dividends, an amount that exceeded the investor's share of the investee company's undistributed income since the investment was acquired. The investor should report dividend income of what amount? Answers: A. $25,000 as a reduction in the investment account B. $25,000 less the amount that is not in excess of its share of undistributed income since the investment was acquired C. $25,000 less recognized earnings D. $25,000 less the amount in excess of its share of undistributed income since the investment was acquired Question 20 Pitch Co. paid $50,000 in fees to its accountants and lawyers in acquiring Slope Company. Pitch will treat the $50,000 as Answers: A. additional cost to investment of Slope on the consolidated balance sheet. B.…