TRUE-FALSE STATEMENTS
1. Corporations purchase investments in debt or share securities generally for one of two reasons.
2. A reason some companies purchase investments is because they generate a significant portion of their earnings from investment income.
3. The accounting for short-term debt investments and for long-term debt investments is similar.
4. When debt investments, are sold, the gain or loss is the difference between the net proceeds from the sale and the fair value of the bonds.
5. Debt investments are investments in government and corporation bonds.
6. The cost of debt investments includes brokerage fees and accrued interest.
7. Dividends received on share investments of less than 20% should be credited to the Share Investments account.
8. If an investor owns between 20% and 50% of an investee's ordinary shares, it is presumed that the investor has significant influence on the investee.
9. The Share Investments account is debited at acquisition under both the equity method and cost method of accounting for investments in ordinary shares.
10. Under the equity method, the investment in ordinary shares is initially recorded at cost, and the Share Investments account is adjusted annually.