91) Under private enterprise reporting an organization can use either the effective interest rate method or straight line to account for the amortization of their bond investment.
92) Investments in long-term bonds are shown on the balance sheet at their current market value.
93) From the buyer's perspective, a discount on a long-term investment in bonds means additional interest revenue while a premium means less interest revenue.
94) Accounting for business activities across national boundaries is called international accounting.
95) If JetNew, a Canadian company, operates a subsidiary in India, the financial statements of that subsidiary must be translated into Canadian dollars prior to consolidation.
96) A decrease in foreign currency value relative to the Canadian dollar between the date of purchase and date of payment will create an exchange gain.
97) An increase in foreign currency value relative to the Canadian dollar between the date of sale and date of cash receipt will create an exchange gain.
98) The domestic-currency translation adjustment is an amount that brings the dollar amount of total liabilities and shareholders' equity of a foreign subsidiary into agreement with the dollar amount of its total assets.
99) Purchases of bonds of other companies are reported as financing activities on the cash-flow statement.
100) Why is understanding the extent to which ATCO Ltd. influences another company important for accounting purposes? What impact does the degree of influence ATCO Ltd. has over another company have on accounting?
101) Prepare journal entries to record the following transactions associated with available for sale investments purchased by Spark Spread Corporation during 2011 Spark Spread Corporation had no investments prior to 2011.
a. Purchased 1,500 shares of Mercury Coal Corporation common shares for $27.50 per share.
b. Mercury Coal Corporation pays a $1.25 per share dividend to all common shareholders.
c. On December 31, 2010, the market price of Mercury Coal Corporation stock is $28.38 per share.
102) Prepare journal entries for the following transactions. Note that each item falls under the available for sale classification.
Jan. 1Yellow-Snow Corporation purchased 200 shares of Dog-Dish Corporation common shares at $40.75.
June 10Received a dividend of $0.75 per share.
Sept. 15Sold 50 shares of Dog-Dish Corporation common shares at $43.00.
Dec. 31Dog-Dish Corporation common shares closed at $43.75.
(Yellow-Snow Corporation had no prior investments to the investment in Dog-Dish Corporation)