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DuBois Corporation purchased a non-strategic investment in 1,000…
DuBois Corporation purchased a non-strategic investment in 1,000 shares of Scotiabank (BNS) for $31 per share. On the next balance sheet date, BNS is quoted at $35 per share. DuBois’s balance sheet should report.
unrealized loss of $4,000.
unrealized gain of $31,000.
investments of $31,000.
investments of $35,000.
Use the DuBois Corporation data in question 1. The company reports changes in fair value through net income DuBois’s income statement should report
unrealized gain of $4,000.
unrealized loss of $4,000.
investments of $31,000.
nothing because DuBois hasn’t sold the investment.
Use the DuBois Corporation data in question 1. DuBois sold the Scotiabank shares for $40,000 the following year. DuBois’s income statement should report
unrealized gain of $4,000.
gain on sale of $9,000.
gain on sale of $5,000.
investments of $40,000.
Tarrant Inc. owns 80% of Rockwall Corporation, and Rockwall owns 80% of Kaufman Company. During 2020, these companies’ net incomes are as follows before any consolidations:
Tarrant, $100,000
Rockwall, $68,000
Kaufman, $40,000
How much net income should Tarrant report for 2020?
$100,000
$164,000
$180,000
$204,000
On January 1, 2020, Vallée Bleue Ltée purchased bond of $100,000 face value at an effective rate of 7% from Mail Frontier Inc. The bonds mature on January 1, 2021. For the year ended December 31, 2020, Vallée Bleu received cash interest of
$5,000.
$6,000.
$6,400.
$7,000.
Return to Vallée Bleue’s bond investment in question 6. Assume an effective interest rate of 6%. For the year ended December 31, 2020, Vallée Bleu earned interest revenue of
$5,000.
$6,000.
$7,000.
$7,700.
Ownership of more than 50% of an investee company’s voting shares.
a.Majority interest
b.Major share
c.Controling share
Entity that owns corporation’s shares.
a.Investor
b.Investee
c.Trustee
The investor usually holds less than ______ of the voting shares and would normally play no important role in the investee’s operations.
a.20%
b.50%
c.30%
Method of combining financial statements of all companies controlled by same shareholders.
a. Consolidation Accounting
b. Managerial Accounting
c. Other Accounting
______ is recorded as an intangible asset.
a. Goodwill
b.Service revenue
c.Other income
Calculate the future value of a $1,000 investment is held for five years in a savings account with 10% simple interest paid annually.
a.$1500
b.$1250
c.$1050
The value on a given date of a future payment or series of future payments, discounted to reflect the time value of money.
a. Present value
b. Future value
c. Matured amount
Calculate the present value of a $1500 matured investment which was held for five years in a savings account with 10% simple interest paid annually.
a. $1000
b. $500
c. $1250
Alexander Moving & Storage Inc. paid $100,000 for 20% of the common shares of Sellers Ltd. Sellers earned net income of $50,000 and paid dividends of $25,000. Alexander accounts for the investment using the equity method. The carrying value of Alexander’s investment in Sellers is
$100,000.
$105,000.
$125,000.
$150,000.
TRULINE Inc. holds an investment in Manulife bonds that pay interest each June 30. TRULINE’s balance sheet at December 31 should report
interest receivable.
interest payable.
interest revenue.
interest expense.
Consolidation accounting
combines the accounts of the parent company and those of the subsidiary companies.
eliminates all liabilities.
reports the receivables and payables of the parent company only.
All of the above.
A subsidiary company’s equity that is held by shareholders other than the parent company.
a. Non-controlling interest
b. Non-strategic investments
c. Long-term investments
_____is called the parent company.
a. Investor
b. Investee
c. Stakeholder
