Multiple Choice—CPA Adapted
111.On October 1, 2014, Wenn Company purchased 700 of the $1,000 face value, 8% bonds of Loy, Inc., for $819,000, including accrued interest of $14,000. The bonds, which mature on January 1, 2021, pay interest semiannually on January 1 and July 1. Wenn used the straight-line method of amortization and appropriately recorded the bonds as available-for-sale. On Wenn’s December 31, 2015 balance sheet, the carrying value of the bonds is
a. $805,000.
b. $798,000.
c. $795,200.
d. $784,000.
112.Valet Corporation began operations in 2015. An analysis of Valet’s equity securities portfolio acquired in 2015 shows the following totals at December 31, 2015 for trading and available-for-sale securities:
Trading Available-for-Sale
SecuritiesSecurities
Aggregate cost$90,000$110,000
Aggregate fair value80,00095,000
What amount should Valet report in its 2015 income statement for unrealized holding loss?
a. $25,000.
b. $5,000.
c. $15,000.
d. $10,000.
113.At December 31, 2015, Jeter Corporation had the following equity securities that were purchased during 2015, its first year of operation:
FairUnrealized
Cost Value Gain (Loss)
Trading Securities:
SecurityA$ 85,000$ 60,000$(25,000)
B 15,000 20,000 5,000
Totals$100,000$ 80,000$(20,000)
Available-for-Sale Securities:
SecurityY$ 70,000$ 80,000$ 10,000
Z 85,000 55,000 (30,000)
Totals$155,000$135,000$(20,000)
All market declines are considered temporary. Fair value adjustments at December 31, 2015 should be established with a corresponding charge against
IncomeStockholders’ Equity
a. $40,000$ 0
b. $25,000$30,000
c. $20,000$20,000
d. $20,000$ 0
114.On December 29, 2015, James Company sold an equity security that had been purchased on January 4, 2014. James owned no other equity securities. An unrealized holding loss was reported in the 2014 income statement. A realized gain was reported in the 2015 income statement. Was the equity security classified as available-for-sale and did its 2014 market price decline exceed its 2015 market price recovery?
2014 Market Price
Decline Exceeded 2015
Available-for-Sale Market Price Recovery
a.YesYes
b.YesNo
c.NoYes
d.NoNo
Use the following information for questions 115 through 117.
Rich, Inc. acquired 30% of Doane Corporation’s voting stock on January 1, 2014 for $800,000. During 2014, Doane earned $320,000 and paid dividends of $200,000. Rich’s 30% interest in Doane gives Rich the ability to exercise significant influence over Doane’s operating and financial policies. During 2015, Doane earned $400,000 and paid dividends of $120,000 on April 1 and $120,000 on October 1. On July 1, 2015, Rich sold half of its stock in Doane for $528,000 cash.
115.Before income taxes, what amount should Rich include in its 2014 income statement as a result of the investment?
a. $320,000.
b. $200,000.
c. $96,000.
d. $60,000.
116.The carrying amount of this investment in Rich’s December 31, 2014 balance sheet should be
a. $800,000.
b. $836,000.
c. $896,000.
d. $920,000.
117.What should be the gain on sale of this investment in Rich’s 2015 income statement?
a. $128,000.
b. $110,000.
c. $98,000.
d. $80,000.
118.On January 1, 2015, Reston Company purchased 25% of Ace Corporation’s common stock; no goodwill resulted from the purchase. Reston appropriately carries this investment at equity and the balance in Reston’s investment account was $1,120,000 at December 31, 2015. Ace reported net income of $700,000 for the year ended December 31, 2015, and paid common stock dividends totaling $280,000 during 2015. How much did Reston pay for its 25% interest in Ace?
a. $1,015,000.
b. $1,190,000.
c. $1,225,000.
d. $1,365,000.
119.On December 31, 2014, Patel Company purchased equity securities as trading securities. Pertinent data are as follows:
Fair Value
Security Cost At 12/31/15
A$132,000$117,000
B168,000186,000
C288,000263,000
On December 31, 2015, Patel transferred its investment in security C from trading to available-for-sale because Patel intends to retain security C as a long-term investment. What total amount of gain or loss on its securities should be included in Patel’s income statement for the year ended December 31, 2015?
a. $3,000 gain.
b. $17,000 loss.
c. $20,000 loss.
d. $35,000 loss.
GraduateWriterHelp.com is an online academic writing platform that provides extensive assistance to graduate school students as they work through their research projects, papers and dissertations. GraduateWriterHelp.com gives students access to experienced professionals who can provide the help they need in a timely and efficient manner. The service offers a wide range of services, including editing, proofreading, formatting, researching and more that can give students the confidence they need to write the perfect paper or dissertation for their chosen subject matter.
Services Offered by GraduateWriterHelp.com
GraduateWriterHelp.com offers a wealth of different services designed to make research projects easier for graduate school students. These include editing, proofreading, formatting and researching services, all tailored specifically for graduate-level studies such as PhDs or Master’s degrees in any field from business administration to engineering or even psychology – all with the aim of helping busy students find success in their academics without having to sacrifice other important commitments like family time or work hours towards earning a living wage outside of college hours.
The Benefits of Using GraduateWriterHelp.com
Using GraduateWriterHelp.com gives you access to experts from all over the world who are highly qualified and experienced in helping graduate-level students to complete successful projects in various fields quickly and efficiently – something that would otherwise be difficult, if not impossible, given tight deadlines associated with most Ph.D./Master’s degree programs today. Moreover, using this platform makes it easier for students to keep up with multiple research tasks simultaneously since there are so many different experts available on tap at any one time – no longer will you have to put off studying one topic while focusing on another because of lack of resources! Additionally, having access to professional editors, proofreaders, but also formatters means that quality control standards aren’t sacrificed when finishing major pieces – since these individuals understand what makes up good academic writing better than anyone else and can offer guidance on how best one should go about making improvements along those lines. Finally, there is also an added cost-saving benefit associated with utilizing Graduate Writer Help compared to hiring an independent contractor (which could potentially run into thousands depending on length/complexity).
This service allows users only pay for what students need, which tends to be much lower overall because customers pay per hour rather than project basis, thus resulting to greater financial flexibility, especially for those just starting out postgraduate studies looking to conserve some pennies here there whenever possible!
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more