Multiple Choice Questions
Questions 1-3 use the following data:
Assume that Clear Networks owns the following long-term available-for-sale investments:

1. Clears balance sheet should report
a. Investments of $108,950.
b. Unrealized loss of $19,900.
c. Investments of $89,050.
d. Dividend revenue of $3,290.
2. Clears income statement should report
a. Gain on sale of investment of $19,900.
b. Unrealized gain of $19,900.
c. Dividend revenue of $3,290.
d. Investments of $89,050.
3. Suppose Clear sells the ABC stock for $73 per share. Journalize the sale.
4. Dividends received on an equity-method investment
a. Decrease the investment account.
b. Increase dividend revenue.
c. Increase the investment account.
d. Increase owner€™s equity.
5. The starting point in accounting for all investments is
a. Cost.
b. Equity value.
c. Cost minus dividends.
d. Market value on the balance-sheet date.
6. Consolidation accounting
a. Reports the receivables and payables of the parent company only.
b. Eliminates all liabilities.
c. Combines the accounts of the parent company and those of the subsidiary companies.
d. All of theabove.

Number Cost per Current Market vidend of Shares Share Company ABC Corp. Good Food, Inc. Lesley Ltd. Value per Share $74 13 26 per Share 1,200 150 700 $60 $2.10 1.40 0.80