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Match the Items Below by Entering the Appropriate Code Letter

Question 68

Matching

Match the items below by entering the appropriate code letter in the space provided.

Premises:

Responses:

Debt instrument held to earn interest income that does not mature within the next year.

Fair value

Accounting entries are required to adjust the investment's carrying value for any increase and decrease in its fair value.

Consolidated financial statements

Financial statements that present the assets and liabilities of the parent and the subsidiary company.

Investee

The Equity Investment in Common Shares account is adjusted for profit and dividends received.

Fair Value adjustment

An investment in equity securities that is purchased to influence or control another.

Significant Influence

Securities that are held for resale in the near future, hopefully at a gain

Trading investments

Amount for which an investment could be sold for in the market.

Equity method

Entity whose shares are owned by the parent company.

Long-term investment

The issuer of a bond

Strategic investment

Normally exists when the investor owns 20% or more of the investee's voting shares.

Strategic Investment

An investment in which there is intention of establishing and maintaining a long-term operating relationship.

Subsidiary company

The investor has control over an investee.

Parent company

Premises:

Debt instrument held to earn interest income that does not mature within the next year.

Accounting entries are required to adjust the investment's carrying value for any increase and decrease in its fair value.

Financial statements that present the assets and liabilities of the parent and the subsidiary company.

The Equity Investment in Common Shares account is adjusted for profit and dividends received.

An investment in equity securities that is purchased to influence or control another.

Securities that are held for resale in the near future, hopefully at a gain

Amount for which an investment could be sold for in the market.

Entity whose shares are owned by the parent company.

The issuer of a bond

Normally exists when the investor owns 20% or more of the investee's voting shares.

An investment in which there is intention of establishing and maintaining a long-term operating relationship.

The investor has control over an investee.

Responses:

Fair value

Consolidated financial statements

Investee

Fair Value adjustment

Significant Influence

Trading investments

Equity method

Long-term investment

Strategic investment

Strategic Investment

Subsidiary company

Parent company

Correct Answer:

Premises:

Responses:

Debt instrument held to earn interest income that does not mature within the next year.

Accounting entries are required to adjust the investment's carrying value for any increase and decrease in its fair value.

Financial statements that present the assets and liabilities of the parent and the subsidiary company.

The Equity Investment in Common Shares account is adjusted for profit and dividends received.

An investment in equity securities that is purchased to influence or control another.

Securities that are held for resale in the near future, hopefully at a gain

Amount for which an investment could be sold for in the market.

Entity whose shares are owned by the parent company.

The issuer of a bond

Normally exists when the investor owns 20% or more of the investee's voting shares.

An investment in which there is intention of establishing and maintaining a long-term operating relationship.

The investor has control over an investee.