4.Which statement regarding available-for-sale investments is true?

A.If the business plans to sell the investments within a year, they are classified as long-term investments.

B.Available for sale investments generally comprise up to 20%, but not including 20%, ownership.

C.Both A and B are true.

D.Neither A nor B is true.

5.When an available-for-sale investment is sold:

A.a realized gain or loss cannot be recorded.

B.a realized gain or loss is reported as an expense on the Income Statement.

C.the amount of the realized gain or loss is the difference between the amount received and the cost of the investment.

D.all of the above occur.

6.Which of the following is true regarding equity-method investments?

A.Gain or loss on the sale of an equity-method investment is the difference between the sale proceeds and the original cost of the investment.

B.The account Equity-method Investment is increased for the receipt of a dividend on an equity-method investment.

C.both of the above are true.

D.none of the above are true.

7.Under the equity method, when an investee company records income, the investor company

A.makes this entry to record its share of the revenue:

Equity-Method InvestmentXX

Equity-Method Investment RevenueXX

B.makes this entry to record its share of the revenue :

Equity-Method Investment RevenueXX

Equity-Method InvestmentXX

C.will debit Cash to report its share of the income.

D.does not make an entry since it is the investee companys income.

8.Which of the following is/are eliminated in the preparation of a consolidated balance sheet?

A.Intercompany receivables and payables

B.Stockholders equity of the subsidiary

C.Investment account

D.All of the above