答案和详解如下： 16.Smith Co. purchased 100 shares of Jones Co. for $40 per share on January 1. By December 31 of the same year, the valuation of Jones Co. had fallen to $30 per share. Which of the following represents the balance sheet valuation of Smith Co's investment in Jones at the end of the year? Jones Co's equity does not trade on an organized exchange. A) $4,000. B) $3,000. C) $1,000. D) Cannot be determined because Jones Co's shares do not trade on an organized exchange.
The correct answer was A)
Since the shares of Jones Co. are not traded on an organized exchange, the valuation of the Jones Co. investment on the Smith balance sheet remains at cost. 100 shares * $40 per share original cost = $4,000. 17.Milburne Company purchased 1,000 shares of Marino Co. for $20 per share on January 1. By December 31, shares of Marino were trading at $15 per share in the open market. Marino Co. has 100,000 shares outstanding with a dividend yield of 2% at year end. Milburne plans to hold the shares of Marino for near-term trading purposes. The impact of the Marino holding on the Milburne income statement is: A) -$4,700. B) $4,700. C) $300. D) -$5,000.
The correct answer was A)
Since these securities are to be classified as trading securities, both the dividend received and the unrealized loss are posted to the income statement. The dividend is computed as 0.02 * $15 * 1,000 = $300 whereas the unrealized loss is $5,000 = ($15 - $20) * 1,000. The net income statement impact is $300 - $5,000 = -$4,700.
18.Milburne Company purchased 1,000 shares of Marino Co. for $20 per share on January 1. By December 31, shares of Marino were trading at $15 per share in the open market. Marino Co. has 100,000 shares outstanding with a dividend yield of 2% at year end. Milburne plans to hold the shares of Marino for longer-term investment and liquidity purposes. The impact of the Marino holding on the Milburne income statement is: A) -$4,700. B) -$5,000. C) $4,700. D) $300.
The correct answer was D)
These securities are to be classified as available for sale and hence, all unrealized gains and losses are posted to a securities valuation reserve on the balance sheet. Hence, the only income statement impact is the $300 dividend = 0.02 * $15 * 1,000.
19.The Anderson Company acquired 100,000 shares of the Birschbach Company on January 1, 2000, at $25 per share. The market price of a share of Birschbach stock on December 31, 2000, was $35 per share. During 2000, Birschbach paid dividends of $1.50 per share and had earnings of $2.50 per share. If the Anderson Company accounts for the Birschbach shares as trading securities, the carrying amount of these shares on Anderson's balance sheet at the end of 2000 is: A) $2.5 million. B) $2.6 million. C) $3.5 million. D) $2.75 million.
The correct answer was C)
Trading securities are measured at fair market value. (100,000)($35) = $3,500,000
20.If Anderson Company accounts for the Birschbach Company shares as securities available-for-sale, the carrying amount of these shares on Anderson's balance sheet at the end of 2000 is: A) $2.5 million. B) $2.6 million. C) $2.75 million. D) $3.5 million.
The correct answer was D)
Available-for-sale securities are measured at fair market value. (100,000)($35) = $3,500,000 | 
发表于 2008-4-2 16:22
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