Reference no: EM132490964
Question 1: Which of the following is NOT a motivation for investment in debt and equity instruments issued by other companies?
Option A. To assist those companies in meeting financial obligations.
Option B. The returns provided by the investments.
Option C. To have a special relationship, with a supplier, for example.
Option D. To exercise influence or control over the operations of the investee.
Question 2: On July 1, 2020, Harry Ltd. purchased $200,000 (par value) of Prince's 8% bonds. Because the market rate was 9%, Harry purchased them for $186,992. The bonds pay interest semi-annually on December 31 and June 30. Harry uses the amortized cost model and the effective-interest method to recognize interest income on bond investments. Rounding values to the nearest dollar (if necessary), the entry to recognize receipt of the first interest payment on December 31, 2020 will include a
Option A. credit to Interest Income of $8,000.
Option B. debit to Cash of $9,000.
Option C. credit to Interest Income of $8,415.
Option D. debit to Cash of $8,415.
Question 3: At December 31, 2020, Silicon Corp.'s stock investment portfolio, which is being accounted for by the fair value through net income (FV-NI) model, shows a general ledger balance of $318,600. It is determined that the fair value of the securities is actually $326,200. The entry to adjust the portfolio to fair value will include a
Option A. credit to FV-NI Investments of $7,600.
Option B. debit to Investment Income or Loss of $7,600.
Option C. credit to Cash of $7,600.
Option D. debit to FV-NI Investments of $7,600.