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
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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.
Under the equity method, when an investor company records its share of investee income,
A. the investor company will debit Cash for their share of the income.
B. the following entry is used to record the revenue:
C. uity-Method InvestmentXX
D. uity-Method Investment RevenueXX
E. the entry to record the revenue is:
F. uity-Method Investment RevenueXX
G. uity-Method Investment XX
H. a memo entry is used to record the revenue.
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