1. Which one of the following is NOT the name of a classification of debt-based investment securities?

a. Available for Sale

b. Trading

c. Shares of stock

d. Held to Maturity

2. Which of the following properly matches the type of security to its accounting method?

a. Trading securities Amortized cost

b. Available for Sale Securities Fair value

c. Held to maturity securities Fair value

d. Available for Sale Securities Amortized cost

3. When should a company use the fair value method to account for its equity investment in another entity?

a. When the company has a controlling interest in the entity

b. When the company has non-influential influence over the entity

c. When the company issues consolidated financial statements with the entity

d. When the company has significant influence over the entity

4. White Paw Co. purchased 11% of the voting stock of Crown, Inc. for $211,000 on 1/1/CY. At the end of the year, the market value of the investment is $232,000. Which one of the following is part of the journal entry White Paw will record at year-end?

a. Dr. Investment in Crown 211,000

b. Dr. Investment in Crown 232,000

c. Cr. Realized gain on securities 21,000

d. Cr. Unrealized gain on securities 21,000

5. Rose Company owns 40% of Daisy Corporations voting stock. At the beginning of the year, Roses investment in Daisy had a book value of $120,000. This year, Daisys net income was $100,000 and paid dividends of 10,000. The fair value of Roses investment in Daisy was $150,000 at year end. What is the ending balance of the investment in Daisy on Roses books?

Select one:

a. 150,000

b. 210,000

c. 186,000

d. 156,000