Question 26 (1 point) The account Unrealized Loss—Income is reported: Question 2

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Question 26 (1 point)

The account Unrealized Loss—Income is reported:

Question 26 options:

as a contra account in the current asset section of the balance sheet.

as a contra account in the stockholders' equity section of the balance sheet.

in the other expenses and losses section of the income statement.

in the operating section of the income statement.

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Question 27 (1 point)

The cost method of accounting for long-term investments in common stock is typically used when the investor:

Question 27 options:

has a controlling interest.

recognizes any goodwill when preparing consolidated financial statements.

owns between 20% and 50% of the investee's outstanding common stock.

owns less than 20% of the investee's common stock.

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Question 28 (1 point)

Dior Manufacturing purchased 100% of Venus, Inc. common stock for $900,000 when Venus had stockholders' equity consisting of $400,000 of common stock and $300,000 of retained earnings. In the consolidated balance sheet, Dior's investment in Venus will be shown at:

Question 28 options:

$0.

$700,000.

$900,000.

$100,000.

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Question 29 (1 point)

At the end of its first year, the trading securities portfolio consisted of the following common stocks:

The unrealized loss to be recognized under the fair value method is:

Question 29 options:

$7,000.

$10,900.

$9,300.

$16,300.

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Question 30 (1 point)

Willow Corporation purchased 2,000 shares of Apex common stock at $70 per share plus $4,000 brokerage fees as a short-term investment. The shares were subsequently sold at $80 per share less $4,800 brokerage fees. The cost of the securities purchased and gain or loss on the sale were:

Question 30 options:

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Question 31 (1 point)

Adam Corporation purchased 3,000 shares of Ozark Company's common stock for $12 per share as a long-term available-for-sale investment on June 30, 2014. Ozark declared and paid a cash dividend of $1.00 per share on its common stock on September 30, and had a closing fair value of $18 per share on December 31. Assuming this investment is appropriately accounted for using the fair value method, it will increase Adam's 2014 income before taxes by (do not show your work; just enter your answer):

Question 31 options:

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Question 32 (1 point)

Clayton Inc. purchased 30% of the outstanding common stock of Austin Industries on January 1, 2014, for $180,000. Austin reported net income of $70,000 for 2014 and declared and paid cash dividends on common stock of $30,000. The amount of Clayton's investment in Austin on December 31, 2014, should be (do not show your work; just enter your answer):

Question 32 options:

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Question 33 (1 point)

Pacific Company bought 35% of the outstanding common stock of Atlantic Inc. on January 1, 2014, for $400,000. Atlantic reported net income of $200,000 for 2014 and declared and paid no dividends for the year. This investment was sold for $500,000 on December 31, 2014. Pacific should report a gain on sale of this investment on its 2014 income statement of (do not show your work; just enter your answer):

Question 33 options:

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Question 34 (1 point)

Copper Inc. accounts for its investment in Ridge Corporation using the fair value method. Copper bought 3,000 shares (5%) of Ridge's outstanding common stock for $28 per share on January 1, 2014. Ridge earned $3 per share for 2014, declared and paid cash dividends of $1 per common share, and had a closing fair value of $24 per share on December 31. The reported balance sheet value of Copper's investment in Ridge at December 31, 2014 is (do not show your work; just enter your answer):

Question 34 options:

as a contra account in the current asset section of the balance sheet.

as a contra account in the stockholders' equity section of the balance sheet.

in the other expenses and losses section of the income statement.

in the operating section of the income statement.

Explanation / Answer

(26) as a contra account in the stockholders' equity section of the balance sheet.

(27) when the investor owns less than 20% of the investee's common stock.

(28) $700,000.

The balance ( = 900,000 - 700,000) $200,000 is reported as Goodwill.

(29) $10,900.

Total unrealized loss = Total cost - Total market value

= $(69,600 + 90,000 + 120,000) - $(75,000 + 80,700 + 113,000)

= $(279,600 - 268,700)

= $10,900

(30) Cost = 144,000 and Gain = 11,200.

Cost = ($70 x 2,000) + $4,000 = $(140,000 + 4,000) = $144,000

Net selling price = $(80 x 2,000) - $4,800 = $(160,000 - 4,800) = $155,200

Gain = $(155,200 - 144,000) = $11,200

NOTE: First 5 questions are answered.

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