B. do nothing special and ignore the fact that the accounting period does NOT coincide with the bond ‟ s interest period.
C. notify the issuer and request that a special payment be made for the appropriate portion of the interest period.
D. make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the amount of interest accrued since the last interest receipt date.
21) Investments in debt securities are generally recorded at A. cost including brokerage and other fees. B. maturity value with a separate discount or premium account. C. maturity value. D. cost including accrued interest.
22) Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the
A. investee pays a dividend. B. earnings are reported by the investee in its financial statements. C. investee declares a dividend. D. investor sells the investment.
23) Bista Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods?
Fair Value Method | Equity Method A. No Effect | No Effect