1. On February 1, 2020, Footbanger Company pays $16,000, including brokerage fees of $1,000, to purchase a portfolio of debt investments paying 10% interest and to be sold within a year. The journal entry to record transaction using the fair value through net income method will include a:

a. Debit to Brokerage Fee Expense for $1,000

b. All of the available choices

c. Debit to Short-Term Investment Bonds for $15,000

d. Credit to Cash for $16,000

2. When an investor plans to generate investment income without intending to establish a long-term relationship with the investee, this investment would be classified as a/an:

a. Long-term investment

b. Non-strategic investment

c. Short-term investment

d. Strategic investment

3. Which of the following statement(s) is/are correct regarding investments in equity?

a. All of the available choices.

b. Non-strategic equity investments are typically investments in shares where less than 20% of the common shares are owned by the investor.

c. Strategic investments are further classified into investments with significant influence and investments with controlling influence.

d. A strategic investment means an investment of 20% or more of the common shares issued by an investee.

4. When an investor plans to sell an investment in the short term at a gain, this investment is sometimes referred to as a/an:

a. Temporary investment

b. Bad management decision

c. Long-term investment

d. Strategic investment

5. The equity method:

a. All of the available choices.

b. Records the purchase of the investment at its original cost

c. Is used to record and report strategic equity investments when the investor owns 20% to 50% of the investees outstanding common shares.

d. Records any brokerage fees as expense