1. Under ASPE, the effective interest rate methodTrueFalse

must be used to amortize the premium or a discount.

2. Investments in debt instruments for the purpose TrueFalse

of holding the investment and earning interest are

valued at amortized cost and classified as non-current

assets.

3. If Dockers Ltd. purchased as a long-term investment, TrueFalse

$ 50,000 face value of Acme bonds at a price of 102.5,

the journal entry to record the purchase would include

a debit to Premium on Bonds.

4. Under the equity method of accounting, the TrueFalse

investment account is debited for dividends received

from the investee.

5. If a company sells an investment in bonds before TrueFalse

maturity at a price below the carrying value of the bond,

a loss is recognized.

6. The purpose of a strategic investment is to maintain TrueFalse

a long-term operating relationship with another company

and an investment in common shares provides the

investor the opportunity to influence or control the investee.

7. Under IFRS, investments in debt and equity TrueFalse

investments for the purpose of selling at a gain are

reported at fair value at the balance sheet date and

any resulting gain or loss from the fair value adjustment

is reported on the income statement.

8. If the fair value is lower than the carrying value TrueFalse

of a trading investment, the investment is written

down to fair value only if the decline is permanent

and not temporary.

9. Under the cost method, the investment is initially TrueFalse

recorded at cost and is not subsequently adjusted

until sold.

10. When an investor owns more than 50% of TrueFalse

common shares of a corporation, it has control

and consolidated financial statements are prepared.