Q9-1. What measure (fair value or amortized cost) is on the balance sheet for (a) trading securities, (b) available-for-sale securities, and (c) held-to-maturity securities?

Q9-2. What is an unrealized holding gain (loss)? Explain.

Q9-3. Where are unrealized holding gains and losses related to trading securities reported in the financial statements? Where are unrealized holding gains and losses related to available-for-sale securities reported in the financial statements?

Q9-4. What does significant influence imply regarding intercorporate investments? Describe the accounting procedures used for such investments.

Q9-5. On January 1 of the current year, Yetman Company purchases 40% of the common stock of Livnat Company for $500,000 cash. This 40% ownership allows Yetman to exert significant influence over Livnat. During the year, Livnat reports $160,000 of net income and pays $120,000 in cash dividends. At year-end, what amount should appear in Yetmans balance sheet for its investment in Livnat?

Q9-6. What accounting method is used when a stock investment represents more than 50% of the investee companys voting stock and allows the investor company to control the investee company? Explain.

Q9-7. What is the underlying objective of consolidated financial statements?

Q9-8. Finn Company purchases all of the common stock of Murray Company for $375,000 when Murray Company has $150,000 of common stock and $225,000 of retained earnings. If a consolidated balance sheet is prepared immediately after the acquisition, what amounts are eliminated in consolidation? Explain.

Q9-9. Bradshaw Company owns 100% of Dee Company. At year-end, Dee owes Bradshaw $150,000 arising from a loan made during the year. If a consolidated balance sheet is prepared at year-end, how is the $150,000 handled? Explain.

Q9-10. What are some limitations of consolidated financial statements?