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Financial Accounting Statements Quiz

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Questions and Answers

According to the statements provided, which one is correct regarding equity security holdings and non-trading equity investments?

Equity security holdings between 20 and 50 percent do not indicate a controlling interest, and non-trading equity investments are recorded at fair value with unrealized gains/losses in profit or loss.

Equity security holdings below 20 percent indicate a controlling interest, and non-trading equity investments are recorded at historical cost.

Equity security holdings above 50 percent indicate a controlling interest, and non-trading equity investments are recorded at fair value with unrealized gains/losses in profit or loss.

Equity security holdings between 20 and 50 percent indicate a controlling interest, and non-trading equity investments are recorded at fair value with unrealized gains/losses in other comprehensive income. (correct)

Which of the following is NOT a direct attributable expenditure related to investment property?

Abnormal amounts of wasted material and labor

Property and transfer taxes

Professional fees for legal services

Start-up costs (correct)

If Pod Company's ending balance in the investment in Jobs, Inc. account was $320,000 after applying the equity method in 2019, and Jobs, Inc. reported net income of $420,000 and distributed dividends of $180,000, what was the purchase price Pod Company paid for its investment in Jobs, Inc.?

$470,000

$380,000

$170,000

$260,000 (correct)

On July 1, 2017, Dreeben Company acquired 600, 10%, $1,000 bonds at 99 plus accrued interest. What does '99 plus accrued interest' mean?

Dreeben Company paid $99 for each $1,000 bond plus any interest accrued since the last interest payment date. (A) Signup and view all the answers

If an investor holds equity securities between 20% and 50% of an investee, what accounting method should be used to account for the investment?

Equity method (C) Signup and view all the answers

Which of the following is considered a direct attributable expenditure related to investment property?

Professional fees for legal services related to the property transaction (B) Signup and view all the answers

What is the amount that Dreeben paid for investments in bonds?

P600,000 (B) Signup and view all the answers

Which two statements best describe 'owner-occupied property' under PAS 40, Investment Property?

Property held to earn rentals and Property held for administrative purposes (B) Signup and view all the answers

What is the cost of ending inventory under Average Method for ABC Corporation?

65.418% (A) Signup and view all the answers

On December 31, 2019, what amount should be reported as investment in associate for Bliss Company?

Php4,000,000 (D) Signup and view all the answers

What should be the expense recognized in the profit or loss for the year ending December 31, 2020 under fair value and cost model for Lancer Company's investment property?

P10,000 and P14,750, respectively (D) Signup and view all the answers

When did Wynn Inc. purchase as a short term investment?

July 2, 2019 (A) Signup and view all the answers