FAR Module 6

The method of accounting for debt investments is based on the investor's intent for holding the investment. When investor intent changes, the classification of and accounting for the debt investment changes. When debt investments are transferred between classifications, which one of the following valuation basis is most likely to be used when recording the investment in the new classification?

Fair value

(This question has been revised from the original to reflect current GAAP.) Peel Co. received a cash dividend from a common stock investment. Should Peel report an increase in the investment account if it accounts for the investment at fair value or uses the equity method of accounting?

Fair value method = No Equity method = No

A debt security is transferred from the held-for-trading portfolio to the available-for-sale portfolio. At the transfer date, the security's cost exceeds its fair value. What amount is used at the transfer date to record the security in the available-for-sale portfolio?

Fair value, regardless of whether the decline in fair value below cost is considered permanent or temporary

A short-term marketable debt security was purchased on September 1, Year 1, between interest dates. The next interest payment date was February 1, Year 2. On the balance sheet at December 31, Year 1, the debt security should be carried at

Fair value.

Cook Company had the following investment portfolio of debt securities that were purchased during Year 2. StockClassificationCostFair Value 12-31-Y2Company RAvailable-for-sale$30,000$32,000Company STrading$42,000$46,000Company TAvailable-for-sale$15,000$18,000 Cook elects to use the fair value option for reporting the investment in Company R. Which of the following statements is true?

Cook will report an unrealized gain on securities for $6,000 on the year 2 income statement.

Stock dividends on common stock should be recorded at their fair value by the investor when the related investment is accounted for under which of the following methods?

Cost = No Equity = No

During 2004, Beam Co. paid $1,000 cash and traded inventory, which had a carrying amount of $20,000 and a fair value of $21,000, for other inventory in the same line of business with a fair value of $22,000. The exchange was made to facilitate sales to their respective customers. What amount of gain (loss) should Beam record related to the inventory exchange?

$0

Sun Corp. had investments in marketable debt securities costing $650,000 that were classified as available-for-sale. On June 30, Year 2, Sun decided to hold the investments to maturity and accordingly reclassified them to the held-to-maturity category on that date. The investments' fair value was $575,000 at December 31, Year 1, $530,000 at June 30, Year 2, and $490,000 at December 31, Year 2. Sun does not elect the fair value option to account for these investments. What amount of loss from investments should Sun report in its Year 2 income statement?

$0

Yola Co. and Zaro Co. are fuel oil distributors. To facilitate the delivery of oil to their customers, Yola and Zaro exchanged ownership of 1,200 barrels of oil without physically moving the oil. Yola paid Zaro $30,000 to compensate for a difference in the grade of oil. On the date of the exchange, cost and market values of the oil were as follows: Yola Co. Zaro Co.Cost $100,000 $126,000Market values 120,000 150,000 In Zaro's income statement, what amount of gain should be reported from the exchange of the oil?

$0

On January 1 of the current year, Barton Co. paid $900,000 to purchase two-year, 8%, $1,000,000 face value bonds that were issued by another publicly traded corporation. Barton plans to sell the bonds in the first quarter of the following year. The fair value of the bonds at the end of the current year was $1,020,000. At what amount should Barton report the bonds in its balance sheet at the end of the current year?

$1,020,000

Information pertaining to dividends from Wray Corp.'s common stock investments for the year ended December 31, 2017 are as follows: On September 8, 2017, Wray received a $50,000 cash dividend from Seco, Inc., in which Wray owns a 30% interest. A majority of Wray's directors are also directors of Seco. On October 15, 2017, Wray received a $6,000 dividend from King Co. Wray owns a 5% in King Co. Wray owns a 2% interest in Bow Corp., which declared a $200,000 cash dividend on November 27, 2017 to stockholders of record on December 15, 2017, payable on January 5, 2018. What amount should Wray report as dividend income in its Income Statement for the year ended December 31, 2017?

$10,000

Lee, Inc. acquired 30% of Polk Corp.'s voting stock on January 1, year 1, for $100,000.During year 1, Polk earned $40,000 and paid dividends of $25,000. Lee's 30% interest in Polk gives Lee the ability to exercise significant influence over Polk's operating and financial policies. During year 2, Polk earned $50,000 and paid dividends of $15,000 on April 1 and $15,000 on October 1. On July 1, year 2, Lee sold half of its stock in Polk for $66,000 cash. The carrying amount of this investment in Lee's December 31, year 1 Balance Sheet should be

$104,500

Lee, Inc. acquired 30% of Polk Corp.'s voting stock on January 1, Year 1 for $100,000. During Year 1, Polk earned $40,000 and paid dividends of $25,000. Lee's 30% interest in Polk gives Lee the ability to exercise significant influence over Polk's operating and financial policies. During Year 2, Polk earned $50,000 and paid dividends of $15,000 on April 1 and $15,000 on October 1. On July 1, Year 2, Lee sold half of its stock in Polk for $66,000 cash. Before income taxes, what amount should Lee include in its Year 1 Income Statement as a result of the investment?

$12,000

Slad Co. exchanged productive assets with Gil Co. and, in addition, paid Gil $100,000 cash. The following information pertains to this exchange: Assets Carrying amounts Fair valuesRelinquished by Gil $75,000 $140,000Relinquished by Slad 40,000 40,000 In Slad's books, the assets acquired should be recorded at what amount?

$140,000

Amble, Inc. exchanged a truck with a carrying amount of $12,000 and a fair value of $20,000 for a truck and $5,000 cash. The fair value of the truck received was $15,000. At what amount should Amble record the truck received in the exchange assuming the exchange lacks commercial substance?

$15,000

Cobb Co. purchased 10,000 shares (2% ownership) of Roe Co. on February 12. Cobb received a stock dividend of 2,000 shares on March 31 when the carrying amount per share on Roe's books was $35 and the market value per share was $40. Roe paid a cash dividend of $1.50 per share on September 15. In Cobb's Income Statement for the year ended October 31, what amount should Cobb report as dividend income?

$18,000

Bayberry Co. has an asset with a cost of $200,000 and accumulated depreciation of $120,000. Driftwood Co. has an asset with a cost of $250,000 and accumulated depreciation of $160,000. Both assets have a fair value of $100,000. Bayberry and Driftwood find it mutually advantageous to exchange assets, and the exchange results in improved future cash flows for both companies. What amount, if any, is Bayberry's gain on the exchange?

$20,000

Pare, Inc. purchased 10% of Tot Co.'s 100,000 outstanding shares of common stock on January 2, Year 1, for $50,000. On December 31, Year 1, Pare purchased an additional 20,000 shares of Tot for $150,000. There was no goodwill as a result of either acquisition, and Tot had not issued any additional stock during Year 1. Tot reported earnings of $300,000 for Year 1. What amount should Pare report in its December 31, Year 1, Balance Sheet as investment in Tot?

$200,000

Clarion had the following investments in its portfolio that were purchased during year 2. Investment Classification Cost Fair Value 12-31-Y2CS of Company X Fair value $100,000 $121,000Bond of Co. Y Available-for-sale $96,000 $101,000 Bond of Co. Z Held-to-maturity $64,000 $63,000 On December 31, Year 2, the amortized cost of Bond Y was $97,000, and the amortized cost of Bond Z was $63,500. Clarion does not elect the fair value option for reporting financial assets. What amount should Clarion record as an unrealized gain in its Year 2 income statement?

$21,000

On July 1, Year 1, Pell Co. purchased Green Corp. 10-year, 8% bonds with a face amount of $500,000 for $420,000. The bonds mature on June 30, Year 9, and pay interest semiannually on June 30 and December 31. Using the interest method, Pell recorded bond discount amortization of $1,800 for the 6 months ended December 31, Year 1. From this long-term investment, Pell should report Year 1 interest revenue of

$21,800

On October 1, year 14, Park Co. purchased 200 of the $1,000-face-value, 10% bonds of Ott, Inc., for $220,000, including accrued interest of $5,000. The bonds, which mature on January 1, year 21, pay interest semiannually on January 1 and July 1. Park used the straight-line method of amortization and appropriately recorded the bonds as held-to-maturity. On Park's December 31, year 15, balance sheet, the bonds should be reported at

$212,000

Jent Corp. purchased bonds at a discount of $10,000. Jent classified the bonds as available-for-sale and subsequently sold them at a premium of $14,000. At the time of the sale, $2,000 of the discount had been amortized. What amount should Jent report as gain on the sale of bonds?

$22,000

Grant, Inc. acquired 30% of South Co.'s voting stock for $200,000 on January 2, 2015. Grant's 30% interest in South gave Grant the ability to exercise significant influence over South's operating and financial policies. During 2015, South earned $80,000 and paid dividends of $50,000. South reported earnings of $100,000 for the six months ended June 30, 2016, and $200,000 for the year ended December 31, 2016. On July 1, 2016, Grant sold half of its stock in South for $150,000 cash. South paid dividends of $60,000 on October 1, 2016. Before income taxes, what amount should Grant include in its 2015 Income Statement as a result of the investment?

$24,000

Plack Co. purchased 10,000 shares (2% ownership) of Ty Corp. on February 14. Plack received a stock dividend of 2,000 shares on April 30 when the market value per share was $35. Ty paid a cash dividend of $2 per share on December 15. In its Income Statement, what amount should Plack report as dividend income?

$24,000

Larkin Co. has owned 25% of the common stock of Devon Co. for a number of years, and has the ability to exercise significant influence over Devon. The following information relates to Larkin's investment in Devon during the most recent year: Carrying amount of Larkin's investment in Devon at the beginning of the year -----> $200,000Net income of Devon for the year -----> $600,000Total dividends paid to Devon's stockholders during the year-----> $400,000 What is the carrying amount of Larkin's investment in Devon at year end?

$250,000

On December 31, Ott Co. had investments in equity securities as follows: % Owned Investment Cost Fair value 12/313% Man Co. $10,000 $11,00019% Kemo, Inc. $9,000 Not readily available5% Fenn Corp. $11,000 $7,000 Ott's December 31 balance sheet should report the equity securities as

$27,000

On December 31, Ott Co. had investments in equity securities as follows: Cost Fair value Lower of cost or fair valueMan Co.: $10,000 $8,000 $8,000Kemo, Inc.: $9,000 $11,000 $9,000Fenn Corp.: $11,000 $9,000 $9,000-------------------------------------------------------------------$30,000 $28,000 $26,000 Ott's December 31 Balance Sheet should report the equity securities as

$28,000.

On December 31, Year 1, Ott Co. had investments in marketable debt securities as follows: CostMarket valueMann Co.$10,000$ 8,000Kemo, Inc.9,00010,000Fenn Corp.11,0009,000$30,000$27,000 The Mann investment is classified as held-to-maturity, while the remaining securities are classified as available-for-sale. Ott does not elect the fair value option for reporting financial assets. Ott's December 31, Year 1, balance sheet should report total marketable debt securities as

$29,000

A company exchanged land with an appraised value of $50,000 and an original cost of $20,000 for machinery with a fair value of $55,000. Assuming that the transaction has commercial substance, what is the gain on the exchange?

$30,000

On January 1, Feld traded a delivery truck and paid $10,000 cash for a tow truck owned by Baker. The delivery truck had an original cost of $140,000, accumulated depreciation of $80,000, and an estimated fair value of $90,000. Feld estimated the fair value of Baker's tow truck to be $100,000. The transaction had commercial substance. What amount of gain should be recognized by Feld?

$30,000

On March 4, 2017, Evan Co. purchased 1,000 shares of LVC common stock at $80 per share. On September 26, 2017, Evan received 1,000 stock rights to purchase an additional 1,000 shares at $90 per share. The stock rights had an expiration date of February 1, 2018. On September 30, 2017, LVC's common stock had a market value, exrights, of $95 per share and the stock rights had a market value of $5 each. What amount should Evan report on its September 30, 2017, Balance Sheet for investment in stock rights?

$4,000

Sage, Inc. bought 40% of Adams Corp.'s outstanding common stock on January 2, Year 1 for $400,000. The investment gave Sage significant influence over Adams. The carrying amount of Adams' net assets at the purchase date totaled $900,000. Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair values exceeded their carrying amounts by $90,000 and $10,000, respectively. The plant has an 18-year life. All inventory was sold during Year 1. During Year 1, Adams reported net income of $120,000 and paid a $20,000 cash dividend. What amount should Sage report in its Income Statement from its investment in Adams for the year ended December 31, Year 1?

$42,000

On January 2, Year 1, Well Co. purchased 10% of Rea, Inc.'s outstanding common shares for $400,000. Well is the largest single shareholder in Rea, and Well's officers are a majority on Rea's board of directors. Rea reported net income of $500,000 for Year 1 and paid dividends of $150,000. Well does not elect the fair value option to report its investment in Rea. In its December 31, Year 1, balance sheet, what amount should Well report as investment in Rea?

$435,000

On January 1, year 4, Purl Corp. purchased, as a long-term investment, $500,000 face value Shaw, Inc. 8% bonds for $456,200. The bonds were purchased to yield 10% interest. Purl has the positive intent and ability to hold the bonds until maturity on January 1, year 10. The bonds pay interest annually on January 1, and Purl uses the interest method of amortization. What amount (rounded to nearest $100) should Purl report on its December 31, year 5, balance sheet for this long-term investment?

$468,000

Paxton Corporation purchased 100 shares of Swedberg Company's common stock. The purchase is for $40 per share plus brokerage fees of $280. Paxton's entry to record the investment would include

Debit - Investment Swedberg $4,280 Credit - Cash $4,280

Green Corp. owns 30% of the outstanding common stock and 100% of the outstanding noncumulative nonvoting preferred stock of Axel Corp. Green's 30% ownership of common stock gives it significant influence over Axel. In 2004, Axel declared dividends of $100,000 on its common stock and $60,000 on its preferred stock. Green exercises significant influence over Axel's operations. What amount of dividend revenue should Green report in its Income Statement for the year ended December 31, 2004?

$60,000

On December 31, 2005, Vey Co. traded equipment with an original cost of $100,000 and accumulated depreciation of $40,000 for productive equipment with a fair value of $60,000. In addition, Vey received $30,000 cash in connection with this exchange. There is commercial substance to the exchange. What should be Vey's carrying amount for the equipment received at December 31, 2005?

$60,000

Simpson Co. received dividends from its common stock investments during the year ended December 31 as follows: A cash dividend of $8,000 from Wren Corp., in which Simpson owns a 2% interest. A cash dividend of $45,000 from Brill Corp., in which Simpson owns a 30% interest. This investment is appropriately accounted for using the equity method. A stock dividend of 500 shares from Paul Corp. was received on December 15 when the quoted market value of Paul's shares was $10 per share. Simpson owns less than 1% of Paul's common stock. In Simpson's Income Statement, dividend revenue should be:

$8,000.

On June 30, 2005, Finn, Inc. exchanged 2,000 shares of Edlow Corp. $30 par value common stock for a patent owned by Bisk Co. The Edlow stock was acquired in 2003 at a cost of $50,000. At the exchange date, Edlow common stock had a fair value of $40 per share, and the patent had a net carrying amount of $100,000 on Bisk's books. Finn should record the patent at

$80,000.

Jill Corp. had investments in marketable debt securities purchased on January 1, Year 1, for $650,000 that were classified as trading securities. On June 30, Year 2, Jill decided to hold the investments to maturity and accordingly reclassified them to the held-to-maturity category on that date. The investments' fair value was $575,000 at December 31, Year 1, $530,000 at June 30, Year 2, and $490,000 at December 31, Year 2. Jill elects the fair value option for reporting these held-to-maturity securities. What amount of loss from investments should Jill report in its Year 2 income statement?

$85,000

Cook Company had the following debt investment portfolio that were purchased during Year 2. BondsClassificationCostFair Value 12-31-Y2Company RAvailable-for-sale$30,000$32,000Company STrading$42,000$46,000Company TAvailable-for-sale$15,000$18,000 Cook elects to use the fair value option for reporting all of its financial assets. What is the unrealized gain recognized on the income statement in Year 2?

$9,000

On July 1, year 4, York Co. purchased, as a held-to-maturity investment, $1,000,000 of Park, Inc.'s 8% bonds for $946,000, including accrued interest of $40,000. The bonds were purchased to yield 10% interest. The bonds mature on January 1, year 11, and pay interest annually on January 1. York uses the effective interest method of amortization. On its December 31, year 4, balance sheet, what amount should York report as investment in bonds?

$911,300

When an investor does not exert influence over the investee and accounts for an equity investment at fair value, cash dividends received by the investor from the investee should normally be recorded as

Dividend income.

In the absence of other relevant factors, what minimum level of voting ownership is considered to give an investor significant influence over an investee?

20%

Zinc Company does not elect to use the fair value option for reporting financial assets. An unrealized gain, net of tax, on Zinc's held-to-maturity portfolio of marketable debt securities should be reflected in the current financial statements as

A footnote or parenthetical disclosure only.

Bensol Co. and Sable Co. exchanged similar trucks with fair values in excess of carrying amounts. In addition, Bensol paid Sable to compensate for the difference in truck values. The exchange has commercial substance. As a consequence of the exchange, Sable recognizes

A gain equal to the difference between the fair value and carrying amount of the truck given up.

Slate Co. and Talse Co. exchanged similar plots of land with fair values in excess of carrying amounts. In addition, Slate received cash from Talse to compensate for the difference in land values. The exchange lacks commercial substance. As a result of the exchange, Slate should recognize

A gain in an amount determined by the ratio of cash received to total consideration.

In an exchange of plant assets, Transit Co. received equipment with a fair value equal to the carrying amount of equipment given up. Transit also contributed cash. The exchange lacks commercial substance. As a result of the exchange, Transit recognized

A loss equal to the cash given up.

Which of the following statements describes the proper accounting for losses when nonmonetary assets are exchanged for other nonmonetary assets?

A loss is recognized immediately, because assets received should not be valued at more than their cash equivalent price.A loss is recognized immediately, because assets received should not be valued at more than their cash equivalent price.

On December 29, year 2, PJ Co. sold a debt security investment that had been purchased on January 4, year 1, PJ owned no other securities. An unrealized loss was reported in the year 1 Income Statement. A realized gain was reported in the year 2 Income Statement. Was the debt security classified as available-for-sale (AFS), and did its year 1 market price decline exceed its year 2 market price recovery?

AFS = No Year 1 market price decline exceeded year 2 market price recovery = No

Band Co. uses the equity method to account for its investment in Guard, Inc. common stock. How should Band record a 2% stock dividend received from Guard?

As a memorandum entry reducing the unit cost of all Guard stock owned.

Which, if any, of the following grants the investor ownership rights?

Bond Investments= No Common Stock Investment= Yes

When an investor acquires sufficient voting common stock of an investee so that it has significant influence, which, if any, of the following kinds of investee data must the investor "capture" at the time the investment is made?

Book values of assets & liabilities = Yes Fair values of assets & liabilities = Yes

Beach Co. determined that the decline in the fair value (FV) of an investment was below the amortized cost and is associated with the credit decline of the issuer (a credit loss). The investment was classified as available-for-sale on Beach's books. Beach Co. does not elect the fair value option to account for these securities. The controller would properly record the decrease in FV by including it in which of the following?

Earnings section of the income statement

An investor purchased a bond classified as a held-to-maturity investment between interest dates at a discount. At the purchase date, the carrying amount of the bond is more than the:

Cash paid to seller = No Face amount of bond = No

On April 1, North Company issued bonds in the market. Upon issue, South Company acquired 10% of North Company's issue. On November 30, South sold the North Company bonds in the market, and the bonds were acquired by East Company. On December 31, which one of the companies, if any, is an investor?

East Company.

Which of the following kinds of investments can result in the investor obtaining significant influence over an investee?

Equity investments = Yes Debt investments = No

When the equity method is used to account for investments in common stock, which of the following affects the investor's reported investment income?

Goodwill amortization related to purchase = No Cash dividends from investee = No

Which, if any, of the following transfers between classifications of debt investments are possible?

Held-to-maturity to held-for-trading = Yes Held-for-trading to held-to-maturity = Yes

Clara Corp. does not elect to use the fair value option to report financial assets. For marketable debt securities included in Clara's held-to-maturity portfolio, which of the following amounts should be included in the period's net income? I. Credit losses during the period II. Gains on securities sold during the period III.Write-off of HTM debt security to the credit allowance

I and II

For a debt securities portfolio classified as available-for-sale, which of the following amounts should be included in the period's net income? I. Unrealized temporary losses during the period II. Realized gains during the period III. Changes in the credit loss allowance during the period

II and III

Which of the following statements is true concerning the correct accounting for equity investments? I. An investor must account for (measure) all equity investments using fair value. II. An investor may elect to account for (measure) some equity investments at fair value.

II only.

Which of the following is true with respect to impairment of available-for-sale securities?

If the decline in fair value is considered to be associated with a credit loss, the unrealized losses in OCI are reclassified to earnings.

How is an impairment loss recognized on the financial statements for a cost method equity investment?

In current earnings

At December 31, Hull Corp. had the following debt securities that were purchased during the year, its first year of operations: CostFair valueUnrealized gain (loss)Held-for-trading:Security A$ 90,000$ 60,000$(30,000)Security B15,00020,0005,000Totals$105,000$ 80,000$(25,000)========================Available-for-sale:Security Y$ 70,000$ 80,000$ 10,000Security Z90,00045,000(45,000)Totals$160,000$ 125,000$(35,000)======================== At December 31, adjustments to fair value should be established with a corresponding charge against

Income = $25,000 Stockholder's equity = $35,000

In which one of the following cases is an investor most likely to use the equity method to carry and report an investment in an investee?

Investor is a manufacturing firm that owns 25% of the voting stock of a consulting firm.

Which of the following statements correctly describes the proper accounting for nonmonetary exchanges that are deemed to have commercial substance?

It recognizes gains and losses immediately.

May Co. and Sty Co. exchanged nonmonetary assets. The exchange did not culminate an earning process for either May or Sty (the exchange lacked commercial substance). May paid cash to Sty in connection with the exchange. The book value of the asset exchanged exceeded its fair value for both firms. Therefore, a loss on the exchange should be recognized by

May = Yes Sty = Yes

An investor purchased a bond as a long-term investment between interest dates at a premium. At the purchase date, the cash paid to the seller is

More than the face amount of the bond.

Solen Co. and Nolse Co. exchanged trucks with fair values in excess of carrying amounts. In addition, Solen paid Nolse to compensate for the difference in truck values. The exchange lacks commercial substance. As a consequence of the exchange, Solen recognizes

Neither a gain nor a loss

On April 1, North Company issued bonds in the market. Upon issue, South Company acquired 10% of North Company's issue. On November 30, South sold the North Company bonds in the market; the bonds were acquired by East Company. On December 31, which, if any, of the following companies is an investee?

North = Yes South = No East = No

On October 1, 200X, Catco acquired 12% of the common stock of Dexco. The firms had no other relationships or transactions. On January 1, 200Y, Catco acquired an additional 18% of Dexco's common stock. There were no other transactions or relationships between the firms during 200Y. What method(s) of accounting would Catco have used for the investment during each of the following periods?

October 1-December 31, 200X = Fair value January 1-December 31, 200Y = Equity method

Which of the following is not an indication that an equity security has readily determinable fair value?

Prices must be estimated based on similar securities in inactive markets.

For an available-for-sale (AFS) security transferred into the trading category, the portion of the unrealized holding gain or loss at the date of the transfer that has not been previously recognized in earnings shall be

Recognized in earnings immediately.

Which one of the following is not considered an equity investment for investment accounting purposes?

Redeemable preferred stock.

In Year 1, Sloco purchased an equity security for $40,000 and determined that the security had no readily determinable fair value. At the end of Year 2, there were observable price changes in a similar security that indicated that the fair value of Sloco's investment had declined to $36,000. Because of recovery in market conditions in Year 3, there were observable price changes in the similar security, indicating that the value of Sloco's investment is $41,000. What amount, if any, would Sloco recognize as an impairment (loss) or gain in Year 2 and Year 3? Year 2 Year 3A. $0 $0B. ($4,000) $0C. ($4,000) $4,000D. ($4,000) $5,000

Row D.

A company has a 22% investment in another company that it accounts for using the equity method. Which of the following disclosures should be included in the company's annual financial statements?

The company's accounting policy for the investment

Assume an entity is holding an equity security where there is not a readily determinable fair value. Which of the following is not a factor to consider in the evaluation of potential impairment?

The costs associated with gathering data on similar investments, researching valuation methodologies, and the cost to hire a valuation consultant

In which one of the following circumstances would an investor most likely have control of an investee?

The investor owns more than 50% of the voting common stock of an investee

Which one of the following is least likely to be a factor in determining how an investment in debt or equity securities is accounted for and reported in financial statements?

The method of payment used to acquire the investment

In its financial statements, Pulham Corp. uses the equity method of accounting for its 30% ownership of Angles Corp. At December 31, Year 2, Pulham has a receivable from Angles. How should the receivable be reported in Pulham's Year 2 financial statements?

The total receivable should be disclosed separately.

In year 1, a company reported in other comprehensive income an unrealized holding loss on a debt investment classified as available-for-sale. During Year 2, these securities were sold at a loss equal to the unrealized loss previously recognized. The reclassification adjustment should include which of the following?

The unrealized loss should be credited to the other comprehensive income account

Which of the following describes a factor when an entity can invoke the practicability exception to using fair value when reporting an equity security?

There are no bid-and-ask quotations available on a securities exchange or in a publicly reported over-the-counter market.

The credit losses associated with the impairment of debt securities are not recognized in which of the following circumstances?

When the entity has positive ability and intent to hold the impaired security and expects to recover the entire cost basis of the impaired security

On March 14, Apple Corporation purchased 6,000 shares of Pear Inc. for $25 per share plus a $340 brokerage fee. On June 30, when the shares were trading at $27, Apple prepared an adjustment to fair value and recorded the annual dividend of $0.40 per share. On August 14, Apple sold 4,000 shares of Pear for $29 per share less a brokerage fee of $225. The journal entry at the date of sale would include

a debit to cash for $115,775.