Changes in fair value of securities are reported on the income statement for which type of securities?

a. Trading securities.

b. Held-to-maturity securities.

c. Available-for-sale securities.

d. Equity method securities.

Which of the following investments held by Watson Company are not reported at fair value on its balance sheet?

a. Investment in common stock held as available-for-sale securities.

b. Investment in debt securities classified as held-to-maturity securities.

c. Investment in preferred stock held as trading securities.

d. All of the above are reported at fair value.

Use the following information for questions 18 and 19.

Oliver Company purchased $1,500,000 of 10% bonds of McGee Corporation on January 1, 2018, paying $1,410,375.The bonds mature January 1, 2028.Interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%.Oliver Company uses the effective- interest method and plans to hold these bonds to maturity.

18. On July 1, 2018, Oliver Company should increase its Debt Investments account for the McGee bonds

for what amount?

a. $8,970.

b. $5,140.

c. $4,485.

d. $2,571.

19. For the year ended December 31, 2018, Oliver Company should report interest revenue on the income

statement from the McGee bonds of:

a. $158,970.

b. $155,283.

c. $155,130.

d. $150,000.

On January 1, 2018, Moss Company acquires $500,000 of Adam Company's 10-year bonds at a price of $532,090 to yield 9%.Interest is payable each December 31.The bonds are classified as held-to-maturity. Assuming that Moss uses the straight-line method of amortization, what is the amount of premium amortization that would be recognized in 2019 related to these bonds?

a. $3,209.

b. $2,110.

c. $2,300.

d. $2,510

Irwin Corporation acquired a 20% interest in Allen Corporation on December 31, 2017 for $135,000. During 2018, Allen had a net income of $75,000 and paid a cash dividend of $30,000.Assuming Irwin did not have significant influence over Allen Corporation, what is the balance in the investment account on December 31, 2018?

a. $111,000.

b. $135,000.

c. $144,000.

d. $150,000.