62 a short term investment acquired at a cost of 65 000 in 2009 is sold in 2010 for 4305879

62 a short term investment acquired at a cost of 65 000 in 2009 is sold in 2010 for 4305879

62) A short-term investment acquired at a cost of $65,000 in 2009 is sold in 2010 for $67,800. At December 31, 2009, the short-term investment had a market value of $66,200. In 2010, the investor should report a(n):

A) Gain on Sale of Short-Term Investment of $1,600

B) Gain on Sale of Short-Term investment  of $2,800

C) Loss on Sale of Short-Term Investment of $2,800

D) Gain on Sale of Short-Term Investment of $1,200

63) A short-term investment was bought on June 17, 2010, for $10,000, and it is worth $13,500 on December 31, 2010. The increase in value will result in:

A) the investment reported on the balance sheet at the cost of $10,000

B) dividend income of $3,500 reported on the income statement

C) a direct $3,500 increase to retained earnings that is not reported on the income statement

D) $3,500 of income on the income statement, even though the gain is unrealized

64) Short-term investments are reported on the balance sheet at:

A) their original cost

B) their market value

C) the lower of their original cost or year-end market value

D) original cost less cumulative dividends received from the investment plus cumulative equity in income of the investee

65) Long-term bond investments are reported on the balance sheet at:

A) their original cost

B) their amortized cost

C) the lower of their original cost or year-end market value

D) at market value

66) A short-term investment cost $22,000 on March 2, 2010, and has declined in value to $20,000 as of December 31, 2010. The entry made to record this decline would include a:

A) credit to the Short-Term Investment account for $2,000

B) debit to the Unrealized Loss on Fair-Value Adjustment account for $2,000

C) debit to the Short-Term Investment account for $2,000

D) credit to the Unrealized Loss on Fair-Value Adjustment account for $2,000

67) On June 30, 2009, Purvis Corporation purchased some shares for $5,000 as a short-term investment. The shares' market value was $6,000 on December 31, 2009, and the market value was $5,500 on December 31, 2010. The entry necessary on December 31, 2010, to record the change in value would include a:

A) debit to the Short-Term Investments account to increase it from $5,000 to $5,500

B) debit directly to the retained earnings account to reduce it by $500

C) debit of $500 to the Unrealized Loss on Fair-Value Adjustment account, which would be reported on the income statement

D) No journal entry would be made.

68) When accounting for short-term investments:

A) only gains are recorded when market value increases above cost

B) only losses are recorded when market value increases above cost

C) losses and gains are recorded when market value changes

D) losses are recorded only when market value decreases below cost

69) Which of the following would not be classified as a long-term investment

A) Ownership of  common shares accounted for using the fair-value method.

B) Ownership of 30% of investee's common shares with significant influence

C) Ownership of  a controlling interest in the investee

D) Ownership of common shares accounted for using the equity method

 

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