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ACCCOB2_4_Investments2

Authored by Editha Trinidad

Business

University

Used 9+ times

ACCCOB2_4_Investments2
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20 questions

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1.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Investments are reported at fair value when a company has a significant influence over another company in which it invests.

T

F

2.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

When insignificant influence exists, the investment should be accounted for by the equity method. 

T

F

3.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Bond investments are long-term assets that earn interest revenue, while bonds payable are long-term liabilities that incur interest expense. 

T

F

4.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

For FA-AC debt securities, interest revenue is calculated as the carrying value of the investment in bonds times the stated nominal interest rate. 

T

F

5.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Because the carrying value of bonds purchased at a premium increases over time, interest revenue will also increase each annual interest period. 

T

F

6.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Which of the following is true with regard to how to account for company A's investment in company B's ordinary shares? 

The fair value method is used when A owns more than 50% of B

The equity method is used when A owns from 20% to 50% of B

The consolidation method is used when A owns less than 20% of B

Any method can be used

7.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Sports Inc purchased 1,000 shares of stock in The Athlete Store for ₱30 per share. The investment is properly classified as FA-FVPL. By the end of the year, the fair value has increased to ₱32 per share. How would the change in share price affect Sports Inc's net income? 

Increase by ₱32,000

Increase by ₱30,000

Increase by ₱2,000

No effect

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