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Test bank for Advanced Accounting, 5th Edition by Hamlen ISBN: 978-1-61853-424-8. All Chapters 1-16 A+ $7.99
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Test bank for Advanced Accounting, 5th Edition by Hamlen ISBN: 978-1-61853-424-8. All Chapters 1-16 A+
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Test bank for Advanced Accounting, 5th Edition by Hamlen ISBN: 978-1-61853-424-8. All Chapters 1-16 A+

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  • November 4, 2023
  • 117
  • 2023/2024
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  • 9781618530974
  • test bank for advanced accounting 5th edition
  • test bank for advanced accounting
  • test bank for advanced accounting by susan hamlen

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Test Bank for Advanced Accounting, 5th Edition by Hamlen




Advanced Accounting, 5th Edition by Hamlen




Test Bank Page 1

, Advanced Accounting, 5th Edition by Hamlen
TEST BANK
CHAPTER 1
Intercorporate Investments: An Overview


MULTIPLE CHOICE


1. Topic: Accounting for equity securities with no significant influence
LO 1
A company invests $350,000 in equity securities on November 30, 2023, and classifies them as
investments with no significant influence. At December 31, 2023, the company’s year-end, the
securities have a fair value of $345,000. On February 1, 2024, the company sells the securities
for $360,000.


Which statement is true regarding how this information is reported in the company’s financial
statements?


a. The company’s December 31, 2023 balance sheet reports the securities at $350,000,
and a loss of $5,000 is reported on the 2023 income statement.
b. The company’s December 31, 2023 balance sheet reports the securities at $345,000,
and a gain of $10,000 is reported on the 2024 income statement.
c. The company’s December 31, 2023 balance sheet reports the securities at $345,000,
and a gain of $15,000 is reported on the 2024 income statement.
d. The company’s December 31, 2023 balance sheet reports the securities at $350,000,
and no gain or loss appears on the 2023 income statement.


ANS: c


2. Topic: Accounting for equity securities with no significant influence
LO 1
Which statement is true concerning the reporting for equity investments with no significant
influence?


a. They are reported at fair value, with any changes in value reported in income.
Gedownload door Rai Irfan ()

, Advanced Accounting, 5th Edition by Hamlen
b. They are categorized as either trading or available-for-sale, with unrealized changes in
the value of trading securities reported in income, and unrealized changes in the value
of AFS securities reported in OCI.
c. They are reported at cost, with unrealized changes in value reported in OCI.
d. They are reported at fair value, with unrealized changes in value reported in OCI.
ANS: a




Gedownload door Rai Irfan ()

, Advanced Accounting, 5th Edition by Hamlen
Use the following information on a company’s investments in equity securities with no
significant influence to answer Questions 3 and 4. The company’s accounting year ends
December 31.


Date of Fair Value Date Selling
Investment Acquisition Cost 12/31/23 Sold Price
Colt Company stock 9/20/23 $38,000 $37,000 2/10/24 $42,000
Dana Company stock 10/2/23 14,000 14,200 1/17/24 13,000




3. Topic: Accounting for equity investments with no significant influence
LO 1
What amount is reported for gain or loss on these securities in 2023 income?


a. No gain or loss
b. $800 loss
c. $3,000 gain
d. $1,000 loss


ANS: b
($37,000 – $38,000) + ($14,200 – $14,000) = $800 loss


4. Topic: Accounting for equity investments with no significant influence
LO 1
What amount is reported for gain or loss on these securities in 2024 income?


a. No gain or loss
b. $3,000 gain
c. $3,800 gain
d. $4,000 gain


ANS: c
($42,000 – $37,000) + ($13,000 – $14,200) = $3,800 gain
Gedownload door Rai Irfan ()

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