34.

Under the equity method, a stock purchase is recorded at its original cost and is not adjusted to fair market value each accounting period.

True

False

36.

Nebraska Inc. issues 4,900 shares of common stock for $156,800. The stock has a stated value of $15 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

a.$83,300

b.$73,500

c.$156,800

d.$4,900

38.

Zach Company owns 45% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $9,100 net loss. Zach Company's entry would include a

a.credit to a loss account for $4,095

b.debit to the investment account for $4,095

c.credit to cash for $4,095

d.credit to the investment account for $4,095

43.

A machine with a cost of $55,000 has an estimated residual value of $4,085 and an estimated life of 5 years or 19,287 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?

a.$11,000

b.$13,200

c.$20,366

d.$22,000

45.

If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be

a.greater than or less than $500,000, depending on the maturity date of the bonds

b.less than $500,000

c.greater than $500,000

d.equal to $500,000