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ACC 102_Investment in Equity Securities

Total questions: 21

Worksheet time: 17mins

Name
Class
Date
1.
It is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
a)
Equity instrument
b)
Debt instrument
c)
Loan and receivable
d)
Loans receivable
2.
Specifically, these securities represent ownership shares such as common stock, preferred stock and other capital stock.
a)
Equity securities
b)
Debt securities
c)
Marketable securities
d)
Current investments
3.
When current investments are carried at market value
a)
Unrealized gains or losses are not recognized
b)
Unrealized gains and losses are recognized and included in equity
c)
Unrealized gains and losses are recognized and included in the determination of income
d)
Current assets
4.
Long-term investments are
a)
Acquired primarily for accretion of wealth
b)
Readily realizable
c)
Classified as current assets
d)
Intended to be held for more than one year
5.
It is when the shares are sold, they carry with them the right to receive dividends.
a)
Between the date of declaration and the date of record
b)
Between the date of declaration and the date of payment
c)
Between the date of record and the date of payment
d)
Between the date of payment and the date of declaration
6.
It is the date when the dividends shall be recognized as revenue.
a)
Date of declaration
b)
Date of record
c)
Date of payment
d)
Date of mailing
7.
Property dividends are recorded at
a)
At cost
b)
Present value
c)
Historical cost
d)
Fair value
8.
When equity shares are of the same class acquired on different dates at different costs, a problem will arise as to the determination of cost of shares sold when only a portion is subsequently sold. In such a case, the entity shall determine the cost of the shares sold using either
a)
FIFO and average cost approach
b)
LIFO and average cost approach
c)
FIFO and LIFO
d)
FIFO and retail cost approach
9.
When the liquidating dividends exceed the cost investment, the difference is
a)
Debited to gain on investment
b)
Credited to gain on investment
c)
Debited to loss on investment
d)
Credited to loss on investment
10.
Share dividends of the same class are recorded only by means of
a)
Adjusting entry
b)
Journal entry
c)
Memorandum entry
d)
No entry
11.
Share dividends of the same class do not affect the total cost of the investment but reduce the cost of the investment per share.
a)
True
b)
False
12.
Share dividends of the same class affects the total cost of the investment.
a)
True
b)
False
13.
From the following, select the most appropriate basis for the valuation of a new investment when properties or services are exchanged for stock.
a)
The par or stated value of the stock received
b)
The book value of the property or services exchanged
c)
The fair market value of the stock received
d)
Either The book value of the property or services exchanged or The fair market value of the stock received whichever is more clearly determinable
14.
This approach means that the share dividends are assumed to be received and subsequently sold at the cash received.
a)
As if approach
b)
BIR approach
c)
Share split
d)
Split down
15.
A restructuring of capital by effecting a change in the number of shares without capitalizing retained earnings or changing the amount of its legal capital.
a)
Share split
b)
Split up
c)
Split down
d)
Special assessment
16.

In Acquisition of Equity Securities by exchange, what is the order of priority in terms of initial measurement

Reorder the following:

a)

FV of asset given

b)

FV of asset received

c)

CA of asset given

1)
2)
3)
17.

Wood Company owns 20,000 shares of Arlo Company's 200,000 shares of PI00 par, 6% cumulative, nonparticipating preference share capital and 10,000 shares representing 2% ownership of Arlo's ordinary Share capital.

During 2019, Arlo Company declared and paid preference dividends of P2,400,000. No dividends had been declared or paid during 2018. In addition, Wood Company received a 5% share dividend on ordinary share from Arlo Company when the quoted market price of Arlo's ordinary share was P10.

What amount should be reported as dividend income for 2019?​ ​ (a)  

Choose from the below words
240,000
125,000
120,000
245,000
18.

Excelsia Company issued rights to subscribe to its stock, the ownership of 4 shares entitling the shareholders to subscribe for 1 share at P100.

Jealina Company owns 50,000 shares of Excelsia Company with total cost of P5,000,000. The share is quoted right-on at 125.

What is the cost of the new investment if all of the stock rights are exercised by the investor?​ ​ (a)  

Choose from the below words
1,500,000
1,250,000
1,562,500
1,450,000
19.

Wray Company provided the following data for the current year. On September 1, Wray received a PS00,000 cash dividend From Seco Company in which Wray owns a 30% interest. On October 1, Wray received a P60,000 liquidating dividend from King Company. Wray owns a 5% interest in King. Wray owns a 10% interest in Bow Company, which declared and paid P2,000,000 cash dividend on November 15.

What amount should be reported as dividend income for the current year?

a)

700,000

b)

560,000

c)

500,000

d)

200,000

20.

Adam Company owned 50,000 ordinary shares of Bland Company. These 50,000 shares were purchased by Adam for P120 per share. On August 30, Bland distributed 50,000 share rights to Adam. Adam was entitled to buy one new share of Bland Company for P90 cash and two of these rights. On August 30, each share had a market value of P130 and each right had a market value of P20.

What total cost should be recorded for the new shares that are acquired by exercising the rights?

a)

2,250,000

b)

3,250,000

c)

3,050,000

d)

5,500,000

21.

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