51.Micron owns 30% of JVT stock. Micron received $6,500 in cash dividends from its investment in JVT. The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

52.When using the equity method, receipt of cash dividends increases the carrying (book) value of an investment in equity securities.

53.To prepare consolidated financial statements when a U. S. parent company has an international subsidiary, the international subsidiary's financial statements must be translated into U.S. dollars.

54.If a U. S. company's credit sale to an international customer allows payment to be made in a foreign currency, the transaction is recorded using the exchange rate on the date of sale.

55.A U. S. Company's credit sale to an international customer allowing payment to be made in a foreign currency requires using the same exchange rate for the date of sale and the cash payment date.

56.Sanuk purchased on credit 20,000 worth of parts from a British company when the exchange rate was 1.66 per British pound. At the year-end balance sheet date the exchange rate increased to $1.69. Sanuk must record a gain of $600.

57.Brown Company sold supplies in the amount of 15,000 euros to a French company when the exchange rate was $1.15 per euro. At the time of payment, the exchange rate decreased to $1.12. Brown must record a loss of $450.

Multiple Choice Questions

58.Long-term investments:

A.Are current assets.

B.Include funds earmarked for a special purpose such as bond sinking funds.

C.Must be readily convertible to cash.

D.Are expected to be converted into cash within one year.

E.Include only equity securities.

59.Short-term investments:

A.Are securities that management intends to convert to cash within the longer of one year or the current operating cycle, and are readily convertible to cash.

B.Include funds earmarked for a special purpose such as bond sinking funds.

C.Include stocks not intended to be converted into cash.

D.Include bonds not intended to be converted into cash.

E.Include sinking funds not intended to be converted into cash.

60.Long-term investments are reported in the:

A.Current asset section of the balance sheet.

B.Intangible asset section of the balance sheet.

C.Non-current section of the balance sheet called long-term investments.

D.Plant assets section of the balance sheet.

E.Equity section of the balance sheet.