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Exam 15: Investments and International Operations

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Question 91

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Bharrat Corporation purchased 40% of Ferris Corporation for $100,000 on January 1.On October 17 of the same year,Ferris Corporation declared total cash dividends of $12,000.At year-end,Ferris Corporation reported net income of $60,000.The balance in the Bharrat Corporation's Long-Term Investment-Ferris account at December 31 should be:

A) $80,800.
B) $100,000.
C) $95,200.
D) $119,200.
E) $124,000.

F) A) and B)
G) A) and C)

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Question 92

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Investments in equity securities where the investor has a significant,but not controlling influence,are accounted for using the _______________ method.

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Question 93

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Short-term investments are intended to be converted into cash within the longer of one year or the current operating cycle of the business,and are readily convertible to cash.

The controlling investor is called the:

An investor presumed to have significant influence owns as least 20% but not more than 50% of another company's voting stock.

On January 4,Year 1,Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker's fee of $1,000.Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell.During each of the next two years,Convell declared and paid cash dividends of $0.85 per share,and its net income was $72,000 and $67,000 for Year 1 and Year 2,respectively.What is the book value of Barber's investment in Convell at the end of Year 2?

Marshall Company sold supplies in the amount of €25,000 (euros) to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

On March 15,Alan Company purchased 10,000 shares of Cameo Corp.stock for $35,000.The investment is classified as available-for-sale securities.On June 30,the stock had a fair value of $34,000.Alan should do which of the following?

A company that is a controlling investor in another company is known as the __________.

Roe Corporation owns 2,000 shares of WRJ Corporation stock.WRJ Corporation has 25,000 shares of stock outstanding.WRJ paid $4 per share in cash dividends to its stockholders.The entry to record the receipt of these dividends is:

Canberry Corporation had net income of $80,000,beginning total assets of $640,000 and ending total assets of $580,000.Its return on total assets is:

Investments in trading securities:

If a U.S.company makes a credit sale to a foreign company,the sales price must be translated into dollars as of the date of _____________.

McVeigh Corp.owns 40% of Gondor Company's common stock.McVeigh received $41,200 in cash dividends from Gondor.The entry to record this transaction should include a:

A company had net income of $2,660,000,net sales of $25,000,000,and average total assets of $8,000,000.Its return on total assets equals:

A company reported net income of $225,000,net sales of $2,500,000,and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover,and return on total assets.

Long-term investments include investments in land or other assets not used in a company's operations.

The currency in which a company presents its financial statements is known as the:

FreshFoods,Inc.sells American gourmet foods to merchandisers in Singapore.Prepare the journal entries for FreshFoods,to record the following transactions.Include any year-end adjustments.

The price of one currency stated in terms of another currency is called a foreign exchange rate.