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  96. Accounting for long-term investments in equity securities with controlling influence uses the: A. Controlling method. B. Equity method. C. Investor method. D. Investment method. E. Consolidation method. 97. The controlling investor is called the: A. Owning company. B. Subsidiary company. C. Parent company. D. Investee company. E. Senior company. 98. Consolidated financial statements: A. Show the results of operations, cash flows, and.
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61. Strategic investments that occur when the investor can significantly influence the strategic operating, investing, and/or financing policies of the investee are called: A. Joint arrangement. B. Investments in associates. C. Business combinations. D. Non-strategic investment in bonds. E. Proportionate investment. 62. You are referred to as an investor when you: A. Purchase shares of company. B. Issue.
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120. As a significant influence investment, Music City held 1,500 Navia Ltd common shares with a carrying value of $55,275. It sold the shares on December 13 for $74,387. Prepare the journal entry to record the sale. 121. As a significant influence investment, Music City held 1,500 Navia Ltd common shares.
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122. Mercury Corporation had the following long-term investment transactions. Prepare the journal entries Mercury Corporation should record for these transactions. 123. On December 31, Year 1, Winnipeg Corp purchased 8,000 shares of Bittner Corp's common shares. This purchase represented 35% of Bittner's outstanding shares and gave Winnipeg significant influence over Bittner's management.
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11. Investments in shares are the same as debt investments. 12. Non-strategic investments are always classified as short-term regardless of how long the investment is planned to be held. 13. Non-strategic investments are of two types: debt and share investments. 14. Investments are often made by companies with excess cash hoping to earn.
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  66. Non-strategic investments usually: A. Are purchased for the short-term. B. Include investments in associates. C. Include shares not intended to be converted into cash. D. Include bonds intended to be held-to-maturity. E. Include shares not intended to be converted into cash and include bonds intended to be held-to-maturity. 67. Non-strategic investments that are intended to.
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41. The equity method is used in accounting for significant influence investments in associates. 42. On May 15, Kingswood Company purchased 30% worth of Pineview Ltd's common shares as a significant influence investment. On September 30, Pineview announced that net income for the year amounted to $650,000. Kingswood should record a.
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137. Match the following terms with the appropriate definition. 1. Subsidiary The investor owns sufficient shares to control the investee's strategic operating, investing and financing policies without the cooperation of others.   2. Equity method An accounting method used for long-term investments when the investor has significant influence over the investee.   3. Joint venture Financial statements that.
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  100. If one company owns more than 20% of the shares of another company and the shares are being held as a long-term investment, which method would normally be used to account for this investment? A. Equity. B. Fair value. C. Historical cost. D. Straight-line. E. Effective. 101. On January 1, 2015, Parris Corporation purchased 75%.
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108. Prepare general journal entries for the following transactions involving short-term securities (assume no investments were held prior to the following transactions): (a) Feb 16: Purchased 500 City Corp shares at $35 per share. Commission was $30. (b) Feb 26: Purchased 800 Southside Corp shares at $25 per share, no commission. (c) Mar.
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16. Accrued interest is paid on bonds that are issued between interest dates. 17. Bond interest rates change as the market rate of interest changes. 18. A bond issue with a $100,000 par value, an 8% annual contract rate, with interest payable semiannually and a 10-year life means that the issuer must.
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151. Fisher Corporation leases photocopy equipment from Jonah Corporation at $24,000 per year for 3 years beginning January 1, 2017. The payments are to be made each December 31, beginning in 2017. The lease agreement meets the criteria for a finance lease. The equipment is to be depreciated straight-line over.
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117. Classical City purchased 1,500 shares of Piano Corp. common shares for $42,250 on August 15 of this year. This purchase represented .09% of Piano Corp's outstanding common shares. Prepare the journal entry to record the purchase. 118. On October 31, Classical City received dividends of $0.23 per share from its.
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152. When the bond contract rate is above the market rate, the bond sells at a(n) _____________. 153. The issue price of bonds is estimated by calculating the present value of the bond's cash payments, discounted at the _______________ rate of interest. 154. The _______________ method allocates bond interest expense over the.
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  91. As an investment in associates, Music City purchased 2,000 Asta Corp common shares for $143,000. Music City also paid $375 in commissions on the transaction. The entry to record the transaction would include a: A. Credit to Common Shares for $2,000. B. Credit to Common Shares for $143,000. C. Credit to Common.
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6. When a corporation purchases the shares or bonds of other companies, it has made an intercorporate investment. 7. "Debt investment" and "debt security" are interchangeable terms. 8. "Share investment" and "equity security" are interchangeable terms. 9. Non-strategic investments are usually held as an investment of cash for use in current operations. 10. If.
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132. Investments in associates are reported as ______________ on the balance sheet. 133. ____________ securities are securities a company intends and is able to hold until maturity. 134. An investing company that owns ____________ of another company's voting shares is presumed to have a significant influence over the investee. 135. An investing company.
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2. The term "equity security" refers to the guarantee your broker gives you concerning an investment that was just made for you. 3. When you purchase a debt investment such as a bond of another corporation, this type of investment represents an "equity security." 4. Strategic investments are classified into three different.
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107. Prepare general journal entries to record the following transactions for The Chocolate Factory in its first year of operations: (a) On May 4, as a short term investment, purchased 500 shares of Power Corp., paying a $500 brokerage fee. (b) On July 1, received $2.00 per share cash dividend on the.
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158. Match each of the following terms with the appropriate definition. 1. Term bonds Bonds that are scheduled for payment at a single specified date.   2. Market rate of interest The interest rate that borrowers are willing to pay and that lenders are willing to earn for a particular bond with similar risk and.
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113. As a long-term investment, Ellen Co. paid $700,000 (par value) for Nickel Bank bonds. The bonds pay 5.5% interest semiannually on September 1 and March 1. Prepare the journal entries for the following transactions. Round all values to the nearest dollar. (1) Purchase on September 1, 2014. (2) Year-end adjusting entry,.
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56. A joint arrangement can be classified as either a joint operation or a joint venture. 57. A joint arrangement requires the use of consolidation to account for the investment in the joint operation. 58. Proportionate consolidation combines the financial statement of an investor and a joint operation enterprise based on the.
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127. A(n) _______________ represents an amount owed and arises when one company lends money to another, such as a bond. 128. A(n) ________________ represents one company's purchase of the shares in another company. 129. The term to describe a corporation's purchase of shares and debt of another corporation is ________________________. 130. If you.
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16. Strategic investments include investments in associates, business combinations and joint arrangements. 17. Management's intent and the marketability of a security determine whether or not a security is classified as a long-term or current asset. 18. Non-strategic investments can result in gains or losses for a company. 19. The main feature of a.
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150. Derrick Corporation purchased two new delivery vans for $85,000 on December 31, 2015. Derrick paid $10,000 and signed a $75,000, 5-year, 12% note for the balance. The note is to be paid off in five annual payments beginning December 31, 2016. Assume the installments are to consist of equal.
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  71. The sale of a short-term equity investment includes a debit to: A. Short-term investments. B. Gain on sale of short-term investment. C. Long-term equity investments. D. Cash. E. All of these answers are correct. 72. Debt investments: A. Are cash equivalents. B. Are usually accounted for using the amortized cost method. C. Can be converted to cash within.
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51. A business combination occurs when an investor with a long-term share investment that represents more than 50% of the investee's voting shares has control over the investee. 52. Joint venture arrangements are ones in which two or more parties jointly control the resulting economic activity. 53. Consolidation combines the financial statements.
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145. Poof Corporation recognized the conversion of $75,000 par value bonds into 5,000 common shares. Prepare the journal entry to record the transaction. 146. Yawn Corporation has bonds outstanding with a par value of $400,000. The unamortized discount on these bonds is $24,500. The corporation called these bonds at 96. Calculate.
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