2 2 The categories for equity security investments are O purchase investments, significant ownership investments, and large stock investments trading securities, available for sale securities, and held to maturity securities. O small stock investments, large stock investments, and subsidiary investments D 3 2 Boris Company invests in bonds at a premium. Boris will not be selling these bonds in the near future, but will not be holding them to maturity. Boris does not need to amortize the bond premium. O True O False - 4 2 An unrealized gain is an increase in the fair value of an asset (in this case, an investment security) that is recorded after the asset is sold. O True O False 5 2 Unrealized gains and losses related to trading securities and noninfluential securities are reported as a separate component of stockholders' equity titled Unrealized Gain/Loss on Investments (Equity). O True O False 6 2 Unrealized gains and losses related to available-for-sale securities are reported as a separate component of stockholders' equity titled Unrealized Gain/Loss on Investments (Equity). O True O False 27 2 An influential stock investment is an investment that gives the owner of the stock the ability to significantly influence the operating and financing activities of the company whose stock is owned. Normally, this requires ownership of 50 - 80 percent of the company's shares. O True O False 8 2 The equity method of accounting for investments requires that the investment is initially recorded at cost; the investment and investment income accounts are increased by the proportionate share of the investee company's net income; the investment account is decreased by dividends received on the investment; and the investment account is reported in the balance sheet at its book value. O True O False 25 10 2 Consolidated financial statements portray the financial position, operating results, and cash flows of affiliated companies as a single economic unit so that the scope of the group enterprise is more realistically conveyed. O True O False