81. In accounting for share investments between 20% and 50%, the _______ method is used.
a.consolidated statements
b.controlling interest
c.cost
d.equity
82. When a company holds shares of several different corporations, the group of securities is identified as a(n)
a.affiliated investment.
b.consolidated portfolio.
c.investment portfolio.
d.controlling interest.
83 Beneteau Corporation purchased 30,000 ordinary shares of La Brea Corporation for €40 per share on January 2, 2014. During 2014, La Brea Corporation had 100,000 shares of ordinary shares outstanding, paid cash dividends of €60,000, and reported net income of €200,000. Beneteau Corporation should report revenue from this investment for 2014 in the amount of
a.€18,000.
b.€42,000.
c.€60,000.
d.€66,000.
84. Carlin Corporation sells 600 ordinary shares being held as a short-term investment. The shares were acquired six months ago at a cost of $50 a share. Carlin sold the shares for $40 a share. The entry to record the sale is
a.Cash...............................................24,000
Loss on Sale of Share Investments...............................6,000
Share Investments...........................................30,000
b.Cash...............................................30,000
Gain on Sale of Share Investments...............................6,000
Share Investments...........................................24,000
c.Cash...............................................24,000
Share Investments...........................................24,000
d.Share Investments.....................................24,000
Loss on Sale of Share Investments...............................6,000
Cash30,000
85. For accounting purposes, the method used to account for long-term investments in ordinary shares is determined by
a.the amount paid for the shares by the investor.
b.the extent of an investor's influence on the operating and financial affairs of the investee.
c.whether the shares has paid dividends in past years.
d.whether the acquisition of the shares by the investor was "friendly" or "hostile."
86. If an investor owns less than 20% of the ordinary shares of another corporation as a long-term investment,
a.the equity method of accounting for the investment should be employed.
b.no dividends can be expected.
c.it is presumed that the investor has relatively little influence on the investee.
d.it is presumed that the investor has significant influence on the investee.
87. If the cost method is used to account for a long-term investment in ordinary shares, dividends received should be
a.credited to the Share Investments account.
b.credited to the Dividend Revenue account.
c.debited to the Share Investments account.
d.recorded only when 20% or more of the shares are owned.
88. If 10% of the ordinary shares of an investee company is purchased as a long-term investment, the appropriate method of accounting for the investment is
a.the cost method.
b.the equity method.
c.the preparation of consolidated financial statements.
d.determined by agreement with whomever owns the remaining 90% of the shares.
89. The cost method of accounting for long-term investments in shares should be employed when the
a.investor owns more than 50% of the investee's shares.
b.investor has significant influence on the investee and the shares held by the investor are marketable equity securities.
c.fair value of the shares held is greater than their historical cost.
d.investor's influence on the investee is insignificant.
90. When an investor owns between 20% and 50% of the ordinary shares of a corporation, it is generally presumed that the investor
a.has insignificant influence on the investee and that the cost method should be used to account for the investment.
b.should apply the cost method in accounting for the investment.
c.will prepare consolidated financial statements.
d.has significant influence on the investee and that the equity method should be used to account for the investment.