41. A long-term investment in debt securities is carried at
A. cost
B. lower of cost or market
C. equity
D. market
42. The amortization of discount on bonds purchased as a long-term investment
A. decreases the amount of interest expense
B. increases the amount of the investment account
C. decreases the amount of the investment account
D. increases the amount of interest expense
43. The amortization of premium on bonds purchased as a long-term investment
A. decreases the amount of interest expense
B. increases the amount of the investment account
C. decreases the amount of the investment account
D. increases the amount of interest revenue
44. On June 1, $400,000 of bonds were purchased as a long-term investment at 97.5 and $500 was paid as the brokerage commission. If the bonds bear interest at 12%, which is paid semiannually on January 1 and July 1, what is the total cost to be debited to the investment account?
A. $400,000
B. $390,500
C. $400,500
D. $390,000
45. On June 1, $400,000 of bonds were purchased as a long-term investment at 101.5 and $500 was paid as the brokerage commission. If the bonds bear interest at 12%, which is paid semiannually on January 1 and July 1, what is the total cost to be debited to the investment account?
A. $400,000
B. $406,500
C. $405,500
D. $402,000
46. The account Investment in Bonds is reported
A. at cost as a long-term liability along with the current portion reported as a current liability
B. at cost as a long-term asset less Discount on Bond Investments or plus Premium on Bond Investments
C. at cost as a long-term asset
D. at fair market value because that is all that is required
47. Which of the following would be considered an “Other Comprehensive Income” item?
A. net income.
B. extraordinary loss related to flood.
C. gain on disposal of discontinued operations.
D. unrealized loss on available-for-sale securities.
48. Which of the following is not a part of comprehensive income?
A. foreign currency items
B. restructuring charges
C. unrealized gains and losses
D. pension liability adjustments
49. Companies may report comprehensive income on each of the statements below except
A. income statement
B. separate statement of comprehensive income
C. statement of stockholders’ equity
D. retained earnings statement
50. Which of the following investments below should be accounted for by using the cost method?
A. temporary investments in stock
B. long-term investments in stock where the investor does not have a significant influence over the investee
C. long-term investments in stock where the investor does have significant influence over the investee
D. temporary investments in stock and long-term investments in stock where the investor does not have a significant influence over the investee