The Ashley Corporation purchased $600,000 of 4%, 5-year bonds at 97 on January 1, 2014. Interest is to be paid semiannually on January 1 and July 1. This is a held-to-maturity investment. This company uses the straight-line method to amortize any premiums or discounts.What is the amount of Interest Revenue recorded on July 1, 2014?
A. $24,000
B. $13,800
C. $10,200
D. $12,000
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The Ashley Corporation purchased $600,000 of 4%, 5-year bonds at 97 on January 1, 2014. Interest is to be paid semiannually on January 1 and July 1. This is a held-to-maturity investment. This company uses the straight-line method to amortize any premiums or discounts.What is the carrying amount of the bond on July 1, 2014?
A. $583,800
B. $582,000
C. $580,200
D. $600,000
Which statement regarding “available-for-sale investments” is true?
Available for sale investments generally comprise up to 20%, but not including 20%, ownership.
B. If the business plans to sell the investments within a year, they are classified as long-term investments.
C. Both A and B are true.
D. Neither A nor B is true.
When an available for sale investment is sold:
A. a realized gain or loss cannot be recorded.
B. the amount of the realized gain or loss is the difference between the amount received and the cost of the investment.
C. a realized gain or loss is reported as an expense on the Income Statement.
D. all of the above occur.
Which of the following is true regarding equity-method investments?
A. Gain or loss on the sale of an equity-method investment is the difference between the sale proceeds and the carrying amount of the investment.
B. The account Equity-method Investment is decreased for the receipt of a dividend on an equity-method investment.
C. both of the above are true.
D. none of the above are true.
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