Non-trading securities are classified as

short-term investments only.

long-term investments only.

either short-term or long-term investments.

current assets only.

At December 31, 2016, EI Greco Company has an investment in 3,000 of the €1,000 8% bonds of
Dublin Company with a carrying value of €3,000,000. The bonds, which mature on January 1, 2021,
pay interest annually on January 1. After collecting the interest on January 1, 2017, EI Greco sells the
bonds for €3,330,000. EI Greco will recognize

an unrealized loss of €240,000.

a loss on the sale of debt investments of €330,000.

a gain on the sale of debt investments for €330,000.

interest revenue of €240,000.

A company may purchase a noncontrolling interest in another firm in a related industry

 for strategic reasons.

for speculative reasons.

to house excess cash until needed.

to generate earnings.

At December 31, 2017, the trading securities for Mayfair, Inc. are as follows:

Security Cost Fair Value

X $180,000 $184,000
Y 300,000 290,000
Z 64,000 56,000
Mayfair should report the following amount related to the securities in its 2017 income statement:

$18,000 unrealized loss.

$4,000 gain.

$14,000 realized loss.

$14,000 unrealized loss.

If the cost method is used to account for a long-term investment in ordinary shares, dividends
received should be

debited to the Share Investments account.

credited to the Dividend Revenue account.

recorded only when 20% or more of the shares are owned.

credited to the Share Investments account.

Which of the following is the correct matching concerning an investor's influence on the operations and
financial affairs of an investee?

% of Investor Ownership Presumed Influence

 Less than 20% Short-term

Between 20%-50% Significant

More than 50% Long-term

Between 20%-50% Controlling

Wu Inc. Purchased 100% of the ordinary shares of Lee Inc. on December 31, 2017. The cost of the
investment exceeded the book value of the subsidiary's net assets by HK$200,000. The fair value of
Lee’s plant assets at December 31, 2017 is HK$10,255,000. Selected account balances from the
separate statements of financial position of Wu and Royal on December on December 31, 2017 are as
follows:

Account Wu Inc. Lee Inc.

Plant assets, net HK$12,435,000 HK$10,055,000
Investment in Lee 13,755,000 -
Share capital 12,685,000 12,555,000
Retained earnings 15,605,000 1,000,000

The amount of plant assets, net reported on the consolidation statement of financial position at
December 31, 2017 is

HK$12,435,000.

HK$22,690,000.

HK$22,490,000.

HK$12,635,000.

On January 1, 2017 Garner Corporation purchased 30% of the ordinary shares outstanding of Landon
Corporation for $500,000. During 2017, Landon Corporation reported net income of $200,000 and
paid cash dividends of $100,000. The balance of the Share Investments—Landon account on the
books of Garner Corporation at December 31, 2017 is

$700,000.

$530,000.

$500,000.

$600,000.
On January 1, 2017, Daley Corporation purchased 30% of the ordinary shares outstanding of King
Corporation for $1,000,000. During 2017, King Corporation reported net income of $400,000 and paid
cash dividends of $200,000. The balance of the Share Investments—King account on the books of
Daley Corporation at December 31, 2017 is

$940,000.

$1,000,000.

$1,060,000.

$1,120,000.

Dobson Inc. earns €1,350,000 and pays cash dividends of €450,000 during 2017. Cornwell
Corporation owns 70,000 of the 210,000 outstanding shares of Dobson.
What amount should Cornwell show in the investment account at December 31, 2017 if the beginning
of the year balance in the account was €120,000?

€600,000

€420,000

€450,000

€300,000

A year-end analysis of Valencia Inc.'s equity securities portfolio acquired in 2017 shows the following
totals at December 31, 2017 for trading and non-trading securities:

Trading Non-Trading
Securities Securities
Aggregate cost €1,800,000 €2,200,000
Aggregate fair value 1,400,000 1,900,000
What amount of unrealized holding loss should Valencia report in its 2014 income statement?

€0.

€100,000.

€300,000.

€400,000.
On January 2, Groneman Corporation acquired 30% of the outstanding ordinary shares of Coulson
Company for $580,000. For the year ended December 31, Coulson reported net income of $90,000
and paid cash dividends of $30,000 on its shares. At December 31, the carrying value of Groneman's
investment in Coulson under the equity method is

$598,000.

$580,000.

$571,000.

$607,000.

Under the equity method, the investor records dividends received by crediting:

Investment Income.

Revenue from Share Investments.

Dividend Revenue.

Share Investments

Wellington Company purchased 100% of the ordinary shares of Royal Company on December 31,
2017. The cost of the investment was equal to the book value of the subsidiary's net assets. Selected
account balances from the separate statements of financial position of Wellington and Royal on
December 31, 2017 are as follows:

Account Wellington Royal

Plant assets, net £3,105,000 £3,165,000
Investment in Royal 10,665,000 -
Share capital 8,055,000 7,665,000
Retained earnings 16,815,000 3,000,000

The amount of plant assets, net reported on the consolidation statement of financial position at
December 31, 2017 is:

cannot be determined from the information given.

£3,105,000.

£3,165,000.
 £6,270,000.

Winrow Co. purchased 50, 6% Johnston Company bonds for $50,000 cash. Interest is payable
annually on January 1. The entry to record the December 31 interest accrual would include a

debit to Interest Receivable for $3,000.

credit to Interest Revenue for $1,500.

debit to Interest Revenue for $3,000.

debit to Debt Investments for $3,000

All of the following are true regarding an investing company which holds more than 50% of the
ordinary shares of an investee except

the investor has a controlling interest in the investee.

the investee is known as an affiliate.

the investor is known as the parent company.

consolidated financial statements are generally required.

When a company holds shares of several different corporations, the group of securities is identified as
a(n)

controlling interest.

affiliated investment.

consolidated portfolio.

investment portfolio.

At the end of its first year, the trading securities portfolio consisted of the following ordinary shares.

Cost Fair Value

Able Corporation $46,400 $50,000
Benes Inc. 60,000 53,800
Cole Corporation 80,000 76,000
$186,400 $179,800

In the following year, the Benes ordinary shares are sold for cash proceeds of $58,000. The gain or
loss to be recognized on the sale is a

gain of $4,200.

gain of $2,200.

loss of $400.

loss of $2,000.

Barr Company acquires 80, 10%, 5 year, €1,000 Community bonds on January 1, 2017 for €80,000.
If Barr sells all of its Community bonds for €78,000, what gain or loss is recognized?

Gain of €2,000

Gain of €10,000

Loss of €10,000

Loss of €2,000