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a. b. c. d. a 5 36. On January 1, 2017, Hammond Corporation purchased 2,000 shares of Jensen Corporation for $60 per share. During the year, $500 cash dividend is received from the Jensen shares. At the end of the year, Jensen's stock is selling for SS8 per share. The Jensen shares are sold by Hammond on February 24, 2018 for $70 per share. Which of the following statement is true? In 2017, Hammond's investment in Jensen shares will be reduced by the amount of dividends received In 2017, Hammond's accumulated other comprehensive income will be increased by the amount of Unrealized Loss-Trading Securities. In 2018, Hammond will report a gain on sale of trading securities of $24,000. In 2018, Hammond will not report for change in the investment's fair value. 37. Which of the following is true about an available-for-sale debt security? It is expected to be held for a short time. b Unrealized gains/losses are reported on the income statement It is accounted for exactly like a trading debt security d. It is reported at fair value at the end of the year. It is purchased to make the company look financially strong 38. Unrealized Gains/Losses on available-for-sale debt securities are reported as part of net income a. gross profit b. comprehensive income. assets. d. liabilities. 39. Tyler Company purchases debt securities of West Company for $2,800 on September 1, 2016. This investment is classified as an available-for-sale security. On December 31, 2016, the investment is valued at $2,000. At what amount will this investment be reported on Tyler's balance sheet? $400 b $2,800 $2,000 d. $800 S500 c. c c. 40. Which of the following is true of reporting investment using equity method? It is always reported at historical cost. b. It is always reported at fair value It is reported at original cost plus portion of income plus dividends d. It is reported at original cost plus portion of income less dividends. It is initially recorded at the cost of purchase and later adjusted for changes in fair value. 41. An investment is usually accounted for by using the equity method if the ownership percentage is more than 75% between 50% 75% more than 50% between 20% 50% 100%