The correct option, the option which indicates the correct type of investment

Question

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Answer 1

Question

Chapter 8, Problem 1QC

To determine

To find: The correct option, the option which indicates the correct type of investment

Expert Solution & Answer

Explanation of Solution

Available-for-sale securities (AFSS): These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Justification for correct answer: C’s investment in M’s Stock is less than 2%, so, the investment cannot be equity-method investment. C’s investment in M’s Stock is intended to be held for 3 years and sell off. Hence, it is classified as available-for-sale investment. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect answer because trading securities are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Option (b) is incorrect answer because equity investments are stock instruments which claim significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
Option (d) is incorrect answer because consolidation is the type of investment which claims significant control and ownership of above 50% in the outstanding stock of the investee company.

Conclusion

Thus, option (c) is the correct answer.

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Cullumber Company uses a job-order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labour cost in Department D, direct labour hours in Department E, and machine hours in Department K. In establishing the predetermined overhead rates for 2022, the following estimates were made for the year. Department D E K Manufacturing overhead $1,280,000 $1,500,000 $840,000 Direct labour costs $1,600,000 $1,312,500 $472,500 Direct labour hours 105,000 125,000 42,000 Machine hours 420,000 525,000 120,000 The following information pertains to January 2022 for each manufacturing department. Department D E K Direct materials used Direct labour costs $147,000 $132,300 $81,900 $126,000 $115,500 $39,375 Manufacturing overhead incurred $103,950 $128,600 $73,950 Direct labour hours 8,400 11,550 3,675 Machine hours 35,700 47,250 10,380 Your answer is partially correct. Calculate the predetermined overhead rate for each department.…

Answer 2

Question

Chapter 8, Problem 1QC

To determine

To find: The correct option, the option which indicates the correct type of investment

Expert Solution & Answer

Explanation of Solution

Available-for-sale securities (AFSS): These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Justification for correct answer: C’s investment in M’s Stock is less than 2%, so, the investment cannot be equity-method investment. C’s investment in M’s Stock is intended to be held for 3 years and sell off. Hence, it is classified as available-for-sale investment. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect answer because trading securities are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Option (b) is incorrect answer because equity investments are stock instruments which claim significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
Option (d) is incorrect answer because consolidation is the type of investment which claims significant control and ownership of above 50% in the outstanding stock of the investee company.

Conclusion

Thus, option (c) is the correct answer.

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Answer 3

Question

Chapter 8, Problem 1QC

To determine

To find: The correct option, the option which indicates the correct type of investment

Expert Solution & Answer

Explanation of Solution

Available-for-sale securities (AFSS): These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Justification for correct answer: C’s investment in M’s Stock is less than 2%, so, the investment cannot be equity-method investment. C’s investment in M’s Stock is intended to be held for 3 years and sell off. Hence, it is classified as available-for-sale investment. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect answer because trading securities are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Option (b) is incorrect answer because equity investments are stock instruments which claim significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
Option (d) is incorrect answer because consolidation is the type of investment which claims significant control and ownership of above 50% in the outstanding stock of the investee company.

Conclusion

Thus, option (c) is the correct answer.

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Answer 4

Question

Chapter 8, Problem 1QC

To determine

To find: The correct option, the option which indicates the correct type of investment

Expert Solution & Answer

Explanation of Solution

Available-for-sale securities (AFSS): These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Justification for correct answer: C’s investment in M’s Stock is less than 2%, so, the investment cannot be equity-method investment. C’s investment in M’s Stock is intended to be held for 3 years and sell off. Hence, it is classified as available-for-sale investment. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect answer because trading securities are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Option (b) is incorrect answer because equity investments are stock instruments which claim significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
Option (d) is incorrect answer because consolidation is the type of investment which claims significant control and ownership of above 50% in the outstanding stock of the investee company.

Conclusion

Thus, option (c) is the correct answer.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 8, Problem 1QC

To determine

To find: The correct option, the option which indicates the correct type of investment

Expert Solution & Answer

Explanation of Solution

Available-for-sale securities (AFSS): These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Justification for correct answer: C’s investment in M’s Stock is less than 2%, so, the investment cannot be equity-method investment. C’s investment in M’s Stock is intended to be held for 3 years and sell off. Hence, it is classified as available-for-sale investment. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect answer because trading securities are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Option (b) is incorrect answer because equity investments are stock instruments which claim significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
Option (d) is incorrect answer because consolidation is the type of investment which claims significant control and ownership of above 50% in the outstanding stock of the investee company.

Conclusion

Thus, option (c) is the correct answer.

Answer 6

Chapter 8, Problem 1QC

To determine

To find: The correct option, the option which indicates the correct type of investment

Expert Solution & Answer

Explanation of Solution

Available-for-sale securities (AFSS): These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Justification for correct answer: C’s investment in M’s Stock is less than 2%, so, the investment cannot be equity-method investment. C’s investment in M’s Stock is intended to be held for 3 years and sell off. Hence, it is classified as available-for-sale investment. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect answer because trading securities are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Option (b) is incorrect answer because equity investments are stock instruments which claim significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
Option (d) is incorrect answer because consolidation is the type of investment which claims significant control and ownership of above 50% in the outstanding stock of the investee company.

Conclusion

Thus, option (c) is the correct answer.

Answer 7

Chapter 8, Problem 1QC

To determine

To find: The correct option, the option which indicates the correct type of investment

Answer 8

Expert Solution & Answer

Explanation of Solution

Available-for-sale securities (AFSS): These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Justification for correct answer: C’s investment in M’s Stock is less than 2%, so, the investment cannot be equity-method investment. C’s investment in M’s Stock is intended to be held for 3 years and sell off. Hence, it is classified as available-for-sale investment. Hence, option (c) is correct.

Justification for incorrect answers:

Option (a) is incorrect answer because trading securities are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Option (b) is incorrect answer because equity investments are stock instruments which claim significant influence of above 20% but less than 50% in the outstanding stock of the investee company.
Option (d) is incorrect answer because consolidation is the type of investment which claims significant control and ownership of above 50% in the outstanding stock of the investee company.