INVESTMENTS – Passive (Market Value)

Measuring and
Effect of Unrealized Holding Gains and
Investment Category Reporting Method
Losses On . . .
Debt Passive, Held-to-maturity Amortized cost Type of Investment
Debt Passive, Not-held-to-maturity Market value Investment Definition Account Equity Net Income
Actively traded Reported on
Stock Passive Market value Trading Allowance
for potential N/A the Income
Stock Significant influence Equity Securities
profit.
Account
Statement
Stock Control Consolidated statement Not actively
Securities Reported
traded, held for Allowance
Available for as part of N/A
investment Account
Sale equity
Income Statement returns.
Trading Securities
Effects Securities Available for Sale
Realized Gains Sales Price > Cost Sales Price > Cost
Realized Losses Sales Price < Cost Sales Price < Cost
Unrealized Gains Adjusted at
N/A
and Losses Year-end
Balance Sheet
Trading Securities
Effects Securities Available for Sale
Unrealized Gains Adjusted at
N/A
and Losses Year-end

Unrealized
Unrealizedholding
holdinggains
gains
and
and losses arerecorded.
losses are recorded.
Date of Future measurement
acquisition date

Investment is Investment carrying

initially recorded amount is adjusted to
at cost. current market value.
INVESTMENTS – Significant Influence (Equity Method)
Adjusting Effect on
NOTE:
Item Realized
Investment gains and losses
Account go on the
Dividends Income Statement.
Reduce investment
for dividends received.
Investee Increase investment
Net Income by our proportionate
share.
Investee Decrease investment
Net Loss by our proportionate
share.

Operating
Operatingactivities:
activities:
Gain
Gainononsale
saleofofinvestment
investment(subtract
(subtractfrom
fromnetnetincome)
income)
Loss on sale of investment (add to net
Loss on sale of investment (add to net income) income)
Equity
Equityininearnings
earningsofofinvestee
investee(subtract
(subtractfrom
fromnet
netincome)
income)
Dividends from investee (add to net
Dividends from investee (add to net income)income)
Unrealized
Unrealizedholding
holdinggains
gainstrading
tradingsecurities
securities(subtract
(subtractfrom
fromnet
netincome)
income)
Unrealized holding losses trading securities (add to net
Unrealized holding losses trading securities (add to net income) income)

Investment carrying amount is adjusted for dividends rece

share of the investee’s income.

(Investment for Accounting - Summary)