introduction chapters
chapter
9Select the appropriate response.
The specific accounting treatment for a long-term investment depends on the type of security purchased, not the intent of the investment.
In evaluating the correct accounting choice (e.g., held-to--maturity, etc.) for a particular investment, which of the following is most apt to be regarded as the "default" choice?
trading securities or available for sale securities
The biggest difference between accounting for trading securities and available for sale securities has to do with:
the asset measurement or how changes in value are recognized
Changes in market value of available-for-sale securities will directly impact:
stockholders' equity or net income
The most popular approach to reporting adjustments to "other comprehensive income" is through the:
stockholders' equity or direct adjustment of the income statement
Presently, the accounting profession purports to use which conceptual approach to measuring income:
current operating or all inclusive
When accounting for available-for-sale securities, the amount of investee earnings has no direct effect on the investor's Investment account.
Dividends received on available-for-sale security investments are reported as income.
Bond investments are initially entered into the accounts at cost; that is, the purchase price plus brokerage fees and other related acquisition costs.
A premium on an investment in bonds would likely result when the contract rate is "what" in relation to the going market rate?
The amortization of a premium on a bond investment causes interest income to be:
The amortization of a discount on a bond investment causes interest income to be:
The excess of the cash received on a bond investment over the initial investment cost is recognized as:
return of investment or income
The amortization method that results in a level amount of interest income each period was illustrated in this chapter. An alternative amortization method will be illustrated in subsequent chapters. The method shown is this chapter was the:
straight-line method or effective-interest method
The equity method involves journal entries at the time the investee's earnings are announced, as well as when:
dividends are paid or market value declines
The equity method of accounting for an investment occurs when the investor has the ability to exercise significant influence over the investee, which is presumed to be the case when the investment level reaches:
Under the equity method, the investor's investment account goes up and down with the investees:
Consolidated financial statements are normally required when the investor's ownership level exceeds the:
When consolidating, which of the following accounts would be eliminated from the consolidated presentation:
Goodwill or Investment in Subsidiary
Goodwill is the excess of the investment cost over "book value" or over "fair value" of the subsidiaries identifiable assets?