西方财务会计课后答案(第十四章)

1、.：.；CHAPTER 13InvestmentsASSIGNMENT CLASSIFICATION TABLEBriefABStudy ObjectivesQuestionsExercisesExercisesProblemsProblems1. Discuss why corpora-tions invest in debt andstock securities.12. Explain the accounting2, 3, 4111A, 2A1B, 2Bfor debt investments.3. Explain the accountingfor stock investments

2、.5, 6, 7, 8,9, 102, 32, 3, 4, 52A, 3A, 4A,5A2B, 3B, 4B,5B4. Describe the use ofconsolidated financialstatements.115. Indicate how debt andstock investments are12, 13, 14,15, 16, 17,4, 5, 6, 7,86, 7, 81A, 2A, 3A,5A, 6A1B, 2B, 3B,5B, 6Bvalued and reported onthe financial statements.186. Distinguish be

3、tween195, 7, 86, 7, 81A, 2A, 3A,1B, 2B, 3B,short-term and long-terminvestments.5A, 6A5B, 6B*7. Describe the content of a9, 109, 107A7Bwork sheet for a consoli-dated balance sheet.*8. Explain the form and20, 217A7Bcontent of consolidated fi-nancial statements.*Note: All asterisked Questions, Exercise

4、s, and Problems relate to material contained in theappendix to the chapter.13-1ASSIGNMENT CHARACTERISTICS TABLEProblemDifficultyTimeNumber1ADescriptionJournalize debt investment transactions and showLevelModerateAllotted (min.)3040financial statement presentation.2AJournalize investment transactions

5、, prepare adjustingModerate3040entry, and show statement presentation.3AJournalize transactions and adjusting entry for stockModerate3040investments.4APrepare entries under the cost and equity methods, andSimple2030tabulate differences.5AJournalize stock investment transactions and show state-Modera

6、te4050ment presentation.6A*7APrepare a balance sheet.Prepare consolidated work sheet and balance sheetModerateSimple30403040when cost exceeds book value.1BJournalize debt investment transactions and showModerate3040financial statement presentation.2BJournalize investment transactions, prepare adjust

7、ingModerate3040entry, and show statement presentation.3BJournalize transactions and adjusting entry for stockModerate3040investments.4BPrepare entries under the cost and equity methods, andSimple2030tabulate differences.5BJournalize stock investment transactions and show state-Moderate4050ment prese

8、ntation.6B*7BPrepare a balance sheet.Prepare consolidated work sheet and balance sheet whenModerateSimple304030cost exceeds book value.13-2BLOOMS TAXONOMY TABLE13-3Correlation Chart between Blooms Taxonomy, Study Objectives and End-of-Chapter Exercises and ProblemsKnowledgeComprehensionApplicationAn

9、alysisSynthesisEvaluationStudy Objective1. Discuss why corporations invest in Q13-1debt and stock securities.Q13-2Q13-3Q13-4Q13-5Q13-8Q13-9Q13-10Q13-6BE13-2BE13-3E13-2E13-3E13-4 E13-5P13-2AP13-3AP13-4AP13-5AP13-2BP13-3BP13-4BP13-5BE13-1P13-1AP13-2AP13-1BP13-2BBE13-12. Explain the accounting for debt

10、investments.Q13-73. Explain the accounting for stockinvestments.4. Describe the use of consolidatedfinancial statements.Q13-12Q13-17Q13-13Q13-18Q13-115. Indicate how debt and stockinvestments are valued andreported on the financialstatements.Q13-19BE13-7BE13-8P13-6AP13-6BQ13-20Q13-21Financial Report

11、ingComparative AnalysisExploring the WebCommunicationP13-7AP13-7BQ13-14Q13-16BE13-4BE13-7BE13-8P13-6AP13-6BQ13-15BE13-5BE13-6E13-6E13-7E13-8P13-1ABE13-5E13-6E13-7E13-8P13-1AP13-2AE13-10BE13-9BE13-10 P13-7AP13-7BE13-9P13-2AP13-3AP13-5AP13-1BP13-2BP13-3BP13-5BP13-3AP13-5AP13-1BP13-2BP13-3BP13-5B6. Dis

12、tinguish between short-termand long-term investments.*7. Describe the content of a worksheet for a consolidated balancesheet*8. Explain the form and content ofconsolidated financial statements.Broadening Your PerspectiveInterpreting Financial Research Case Ethics CaseA Global Focus CookieStatementsC

13、hronicleGroup Decision CaseANSWERS TO QUESTIONS.5.6.The reasons corporations invest in securities are: (1) they have excess cash not needed for op-erations that can be invested, (2) to generate additional earnings, and (3) strategic reasons.(a) The cost of an investment in bonds consists of t

14、he market price of the bonds plus any bro-kerage fees.(b) Interest is recorded as it is earned; that is, over the life of the investment in bonds.(a) Losses and gains on the sale of debt investments are computed by comparing the costof the bonds to the net proceeds from the sale.(b) Losses are repor

15、ted in the income statement under other expenses and losses whereasgains are reported under other revenues and gains.Sablow Company is incorrect. The gain is the difference between the net proceeds, exclusive ofinterest, and the cost of the bonds. The correct gain is $4,000, or ($45,000 $1,000) $40,

16、000.The cost of an investment in stock includes all expenditures necessary to acquire the invest-ment. These expenditures include the actual purchase price plus any commissions or broker-age fees.Brokerage fees are part of the cost of the investment. Therefore, the entry is:Stock Investments .Cash.6

17、3,50063,5000.(a) Whenever the investors influence on the operating and financial activities of the investee issignificant, the equity method should be used. The major factor in determining significantinfluence is the percentage of ownership interest held by the investor in the investee. Thege

18、neral guideline for use of the equity method is 20% or more ownership interest. Compa-nies are required to use judgment, however, rather than blindly follow the 20% guideline. Forexample, 25% ownership in a company that is 75% controlled by another organization wouldnot indicate significant influenc

19、e.(b) Revenue is recognized as it is earned by the investee.Since Diaz Corporation uses the equity method, the income reported by Victor Packing ($80,000)should be multiplied by Diazs ownership interest (25%) and the result ($20,000) should be deb-ited to Stock Investments and credited to Revenue fr

20、om Investment in Victor Packing. Also, of thetotal dividend declared and paid by Victor ($10,000) Diaz will receive 25% or $2,500. Thisamount should be debited to Cash and credited to Stock Investments.Significant influence over an investee may result from representation on the board of directors,pa

21、rticipation in policy-making processes, and material intercompany transactions. An investment(direct or indirect) of 20% or more of the voting stock of an investee constitutes significant influ-ence unless there exists evidence to the contrary.Under the cost method, an investment is originally recor

22、ded and reported at cost. Dividends arerecorded as revenue. In subsequent periods, it is adjusted to fair value and an unrealized holdinggain or loss is recognized and included in income (trading security) or as a separate componentof stockholders equity (available-for-sale security). Under the equi

23、ty method, the investment is13-4Questions Chapter 13 (Continued)originally recorded and reported at cost; subsequently, the investment account is adjusted dur-ing each period for the investors share of the earnings or losses of the investee. The investorsshare of the investees earnings is recognized

24、 in the earnings of the investor. Dividendsreceived from the investee are reductions in the carrying amount of the investment.11.12.Consolidated financial statements present the details of the assets and liabilities controlled bythe parent company and the aggregate profitability of the affiliated co

25、mpanies.The valuation and reporting of investments is as follows:CategoryTradingAvailable-for-saleValuation and ReportingAt fair value with changes reported in net incomeAt fair value with changes adjusted through stockholders equityAdditionally, debt securities which are intended to be held to matu

26、rity will be reported atamortized cost.Investments recorded under the equity method are reported at their carrying value. The car-rying value is the cost adjusted for the investors share of the investees income and divi-dends received.13.Jane should report the data as follows:(1)Under current assets

27、 in the balance sheet:Short-term investment, at fair value.$72,000)(2)Under other expenses and losses in the income statement:Unrealized loss on trading securities .$2,000)14.Jane should report the data as follows:(1)Under investments in the balance sheet:Investment in stock of less than 20% owned c

28、ompanies, at fair value .$72,000)(2)Under stockholders equity in the balance sheet:Less: Unrealized loss on available-for-sale securities.$(2,000)15.The entry is:Market AdjustmentAvailable-for-Sale.Unrealized Gain or LossEquity.15,00015,00016.The entry is:Market AdjustmentTrading .Unrealized GainInc

29、ome .15,00015,00017.Unrealized LossEquity is reported as a deduction from stockholders equity. The unrealizedloss is not included in the computation of net income.13-5Questions Chapter 13 (Continued)18. Reporting Unrealized Gains (Losses)Equity in the stockholders equity section serves twoimportant

30、purposes: (1) it reduces the volatility of net income due to fluctuations in fair value,and (2) it informs the financial statement user of the gain or loss that would occur if the secu-rities were sold at fair value.19. The investment in Ivy Corporation stock is a long-term investment because there

31、is no intentto convert the stock into cash within a year or the operating cycle, whichever is longer.*20. (a)(b)The parent companys investment in the subsidiarys common stock and the subsidiarysstockholders equity account balances are eliminated.The Investment account represents an interest in the n

32、et assets of the subsidiary. The bal-ance sheet of the subsidiary lists all its assets and liabilities (the net assets). Therefore,there would be a double counting of net assets. Similarly, there would be a double countingin stockholders equity because all the common stock of the subsidiary is owned

33、 by thestockholders of the parent.*21. The remaining excess $8,000, $318,000 ($290,000 + $20,000) should be allocated togoodwill and presented in the consolidated balance sheet as Intangible assetsGoodwill.13-6SOLUTIONS TO BRIEF EXERCISESBRIEF EXERCISE 13-1Jan. 1July 1Debt Investments .Cash.Cash.Int

34、erest Revenue.46,8002,34046,8002,340BRIEF EXERCISE 13-2Aug. 1Dec. 1Stock Investments .Cash.Cash.Stock Investments .Gain on Sale of Stock Investments .35,60040,00035,60035,6004,400BRIEF EXERCISE 13-3Dec. 3131Stock Investments .Revenue from Investment in HydeCompany (30% X $180,000) .Cash (30% X $50,0

35、00).Stock Investments .54,00015,00054,00015,000BRIEF EXERCISE 13-4Dec. 31Unrealized LossIncome .Market AdjustmentTrading .($64,000 $59,000)13-75,0005,000BRIEF EXERCISE 13-5Balance SheetCurrent assetsShort-term investments, at fair value.Income StatementOther expenses and lossesUnrealized loss on tra

36、ding securities .BRIEF EXERCISE 13-6$59,000(5,000)Dec. 31Unrealized Gain or LossEquity .Market AdjustmentAvailable-for-Sale .4,0004,000The unrealized loss is reported as a deduction from stockholders equity.BRIEF EXERCISE 13-7Balance SheetInvestmentsInvestment in stock of less than 20% ownedcompanie

37、s, at fair value .Stockholders equityLess unrealized loss on available-for-sale securities .BRIEF EXERCISE 13-8InvestmentsInvestment in stock of less than 20% ownedcompanies, at fair value .Investment in stock of 2050% owned companies,at equity .Total investments .13-8$68,000)$(4,000)$115,000250,000

38、$365,000*BRIEF EXERCISE 13-9EliminationsPaulaShannonConsolidatedCompanyCompanyDr.Cr.DataInvestment inShannonCommon StockCommon StockRetained Earnings190,000120,00070,000120,00070,000190,000000*BRIEF EXERCISE 13-10EliminationsPaulaShannonConsolidatedCompanyCompanyDr.Cr.DataInvestment inShannonCommon

39、Stock200,000200,0000Excess of CostOver Book Value10,00010,000Common StockRetained Earnings120,00070,000120,00070,0000013-9SOLUTIONS TO EXERCISESEXERCISE 13-1(a) Jan. 1July 11(b) Dec. 31Debt Investments.Cash ($60,000 + $900).Cash ($60,000 X 8% X 1/2).Interest Revenue .Cash ($34,000 $500).Debt Investm

40、ents.($60,900 X 1/2)Gain on Sale of Debt Invest-ments ($33,500 $30,450) .Interest Receivable.Interest Revenue .60,9002,40033,5001,20060,9002,40030,4503,0501,200($30,000 X 8% X 1/2)EXERCISE 13-2(a) Feb. 1July 1Sept. 1Dec. 1Stock Investments.Cash ($8,000 + $200).Cash (800 X $1).Dividend Revenue.Cash (

41、$4,400 $100).Stock Investments.($8,200 X 3/8)Gain on Sale of Stock Invest-ments ($4,300 $3,075).Cash (500 X $1).Dividend Revenue.8,2008004,3005008,2008003,0751,225500(b) Dividend revenue and the gain on sale of stock investments arereported under other revenues and gains in the income statement.13-1

42、0EXERCISE 13-3Jan. 1July 1Dec. 1Dec. 31Stock Investments .Cash ($140,000 + $2,100) .Cash (2,000 X $3).Dividend Revenue .Cash ($37,000 $800) .Stock Investments ($142,100 X 1/4) .Gain on Sale of Stock Investments .Cash (1,500 X $3).Dividend Revenue .142,1006,00036,2004,500142,1006,00035,5256754,500EXE

43、RCISE 13-4(a) Jan. 1Dec. 3131Stock Investments .Cash.Cash ($60,000 X 30%).Stock Investments .Stock Investments .Revenue from Investment inSnapper Corp. .($200,000 X 30%)180,00018,00060,000180,00018,00060,000(b) Investment in Snapper, January 1 .Less: Dividend received.Plus: Share of reported income.

44、Investment in Snapper, December 31.EXERCISE 13-5(a) 2006$180,000(18,000)60,000$222,000Mar. 18Stock Investments .Cash (200,000 X 10% X $13).13-11260,000260,000EXERCISE 13-5 (Continued)June 30Dec. 31Cash.Dividend Revenue .($60,000 X 10%)Market AdjustmentAvailable-for6,0006,000Sale.Unrealized GainEquit

45、y.($300,000 $260,000)40,00040,000(b) Jan.1Stock Investments .Cash (30,000 X 25% X $9) .67,50067,500June 15Dec. 31Cash.Stock Investments .($30,000 X 25%)Stock Investments .Revenue from Investment inGamma Corp. .7,50020,0007,50020,000($80,000 X 25%)EXERCISE 13-6(a) Dec. 31(b)Unrealized LossIncome .Mar

46、ket AdjustmentTrading .Balance Sheet6,0006,000Current assetsShort-term investments, at fair value.Income StatementOther expenses and lossesUnrealized loss on trading securities .13-12$47,000$6,000EXERCISE 13-7(a) Dec. 31(b)Unrealized Gain or LossEquity .Market AdjustmentAvailable-for-Sale.Balance Sh

47、eet6,0006,000InvestmentsInvestment in stock of less than 20% ownedcompanies, at fair value.Stockholders equityLess: Unrealized loss on available-for-salesecurities .$47,000)$(6,000)(c) Dear Mr. Istanbel:Investments which are classified as trading (held for sale in the nearterm) are reported at fair

48、value in the balance sheet, with unrealizedgains or losses reported in net income. Investments which are clas-sified as available-for-sale (held longer than trading but not tomaturity) are also reported at fair value, but unrealized gains orlosses are reported in the stockholders equity section.Fair

49、 value is used as the reporting basis because it represents thecash realizable value of the securities. Unrealized gains or losses ontrading securities are reported in the income statement because ofthe likelihood that the securities will be sold at fair value in the nearterm. Unrealized gains or lo

50、sses on available-for-sale securities arereported in stockholders equity rather than in income because thereis a significant chance that future changes in fair value will reverseunrealized gains or losses. So as to not distort income with thesefluctuations, they are reported directly in stockholders

51、 equity.I hope that the preceding discussion clears up any misunderstand-ings. Please contact me if you have any questions.Sincerely,Student13-13EXERCISE 13-8(a) Market AdjustmentTrading .Unrealized GainIncome.($123,000 $120,000)Unrealized Gain or LossEquity .Market AdjustmentAvailable-for-Sale .3,0

52、008,0003,0008,000(b)Current assetsBalance SheetShort-term investments, at fair value.InvestmentsInvestment in stock of less than 20% ownedcompanies, at fair value .Stockholders equityLess: Unrealized loss on available-for-salesecurities.Income StatementOther revenues and gainsUnrealized gain on trad

53、ing securities .13-14$123,000)92,000)$(8,000)$3,000)*EXERCISE 13-9LENNON CORPORATION AND SUBSIDIARYWork SheetConsolidated Balance SheetJanuary 1, 2006LennonOnoEliminationsConsolidatedAssetsCurrent assetsCorporation60,000Inc.50,000Dr. Cr.Data110,000Investment in OnoInc. common stock220,000220,0000Pla

54、nt and equip-ment (net)Totals300,000580,000220,000270,000520,000630,000Liabilities andstockholdersequityCurrent liabilities180,00050,000230,000Common stockLennon Corp.Common stock230,000230,000Ono Inc.80,00080,0000Retained earningsLennon Corp.Retained earnings170,000170,000Ono Inc.Totals.580,000140,

55、000270,000140,000220,000.220,0000630,00013-15*EXERCISE 13-10LENNON CORPORATION AND SUBSIDIARYWork SheetConsolidated Balance SheetJanuary 1, 2006LennonOnoEliminationsConsolidatedAssetsCurrent assetsCorporation55,000Inc.50,000Dr. Cr.Data105,000Investment in OnoInc. common stock225,000225,0000Plant and

56、 equip-ment (net)300,000220,000520,000Excess of cost overbook value5,0005,000Totals580,000270,000630,000Liabilities andstockholdersequityCurrent liabilities180,00050,000230,000Common stockLennon Corp.Common stock230,000230,000Ono Inc.80,00080,0000Retained earningsLennon Corp.Retained earnings170,000

57、170,000Ono Inc140,000140,0000Totals580,000270,000220,000225,000630,00013-16SOLUTIONS TO PROBLEMSPROBLEM 13-1A(a) 2006Jan. 1July 1Dec. 312021Jan. 11July 1Dec. 31(b) 2006Dec. 31Debt Investments .Cash.Cash ($800,000 X .09 X 1/2) .Interest Revenue.Interest Receivable .Interest Revenue.Cash.Interest Rece

58、ivable .Cash ($400,000 X 1.14) $7,000.Debt Investments.Gain on Sale of DebtInvestments .Cash ($400,000 X .09 X 1/2) .Interest Revenue.Interest Receivable .Interest Revenue.Unrealized Gain or LossEquity.Market AdjustmentAvailable-for-Sale .13-17800,00036,00036,00036,000449,00018,00018,00030,000800,00

59、036,00036,00036,000400,00049,00018,00018,00030,000PROBLEM 13-1A (Continued)(c)Current assetsBalance SheetInterest receivable .InvestmentsDebt investments, at fair value.$36,000$770,000The unrealized loss of $30,000 would be reported in the stockholdersequity section of the balance sheet as a deducti

60、on from total paid-incapital and retained earnings.13-18PROBLEM 13-2A(a) Feb. 1Mar. 1Apr. 1July 1Aug. 1Sept. 1Oct. 11Stock Investments .Cash ($40,000 + $800) .Stock Investments .Cash ($15,000 + $300) .Debt Investments .Cash ($60,000 + $1,200).Cash ($.60 X 600).Dividend Revenue .Cash ($21,000 $350) .