Wise Company owns 30% interest in the stock of Dark Corporation. During the year, Dark pays $20,000 in dividends to Wise, and reports $200,000 in net income. Wise Company's investment in Dark will increase Wise's net income by On January 1, 2013, Audrey Corp. paid $800,000 for 100,000 shares of Off Company's common stock, which represents 40% of Off's outstanding common stock. Off reported net income of $200,000 and paid cash dividends of $60,000 during 2013. Audrey should report the investment in Off Company on its December 31, 2013, balance sheet at: [removed] $856,000 [removed] $824,000 [removed] $800,000 [removed] $744,000 Corporations invest in other companies for all of the following reasons except to [removed] generate earnings. [removed] meet strategic goals. [removed] increase trading of the other companies' stock. [removed] house excess cash until needed. 1) Dayton Corporation purchased 1,000 shares of Kart common stock at $77 per share plus $2,000 brokerage fees as a short-term investment. The shares were subsequently sold at $80 per share less $3,400 brokerage fees. The cost of the securities purchased and gain or loss on the sale were Cost Gain or Loss $79,000 $2,400 loss $77,000 $1,400 loss $77,000 $3,000 gain $79,000 $2,000 gain 2) The company whose stock is owned by the parent company is called the sibling company. controlled company. subsidiary company. investee company. 3) Debt investments that are held to maturity are recorded at fair value. maturity value. original cost. amortized cost. 4) The balance sheet presentation of an unrealized loss on a non-trading security is similar to the statement presentation of discount on bonds payable. treasury stock. allowance for doubtful accounts. prepaid expenses. 5) An unrealized loss on non-trading securities is reported under Other Expenses and Losses in the income statement. reported as a separate component of stockholders' equity. deducted from the cost of the investment. closed-out at the end of the accounting period 6) The equity method of accounting for an investment in the common stock of another company should be used by the investor when the investment enables the investor to exercise significant influence over the investee. is obtained by an exchange of stock for stock. ensures a source of supply of raw materials for the investor. is composed of common stock and it is the investor's intent to vote the common stock 7) On January 1, 2013, Danner Company purchased at face value, a $1,000, 8% bond that pays interest on January 1 and July 1. Danner Company has a calendar year end. The entry for the receipt of interest on July 1, 2013, is Cash 80 Interest Revenue 80 Interest Receivable 80 Interest Revenue 80 Cash 40 Interest Revenue 40 Interest Receivable 40 Interest Revenue 40 8) If a company acquires a 40% common stock interest in another company, the equity method is usu.