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  • Chapter 12 - Investment

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    Phuong Tran
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    This document outlines different types of investments and how they are accounted for. It discusses equity method for 20-50% stock ownership, held-to-maturity bonds that are acquired and held until maturity, and trading securities acquired for short-term gains. It also covers available-for-sale securities that are acquired and may be sold before maturity and the accounting treatment for dividends, mark-to-market adjustments, interest received, and gains or losses on sale for each type.

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    This document outlines different types of investments and how they are accounted for. It discusses equity method for 20-50% stock ownership, held-to-maturity bonds that are acquired and held until maturity, and trading securities acquired for short-term gains. It also covers available-for-sale securities that are acquired and may be sold before maturity and the accounting treatment for dividends, mark-to-market adjustments, interest received, and gains or losses on sale for each type.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    27 views1 page

    Chapter 12 - Investment

    Uploaded by

    Phuong Tran
    This document outlines different types of investments and how they are accounted for. It discusses equity method for 20-50% stock ownership, held-to-maturity bonds that are acquired and held until maturity, and trading securities acquired for short-term gains. It also covers available-for-sale securities that are acquired and may be sold before maturity and the accounting treatment for dividends, mark-to-market adjustments, interest received, and gains or losses on sale for each type.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    Own 20-50% stocks

    Equity method
    *Acquired

    1. Held-to-maturity
    (Bonds only)
    *Acquired

    Own < 20% stocks


    2. Trading securities
    *Acquired

    3. Available-for-sale
    securities
    *Acquired

    Investment
    Cash

    Investment
    Cash

    * Dividends
    Cash
    Investment rev.

    * Dividends
    Cash
    Investment rev.

    *Mark-to-market
    adjustment (year-end)

    *Mark-to-market
    adjustment (year-end)

    Investment
    Unrealized Gain

    Investment
    Unrealized Gain

    (Compare FV & cash paid)

    Investment
    Cash

    * Dividends
    Cash
    Investment rev.

    Investment
    FV
    Cash
    Discount
    Or
    Investment
    FV
    Premium
    Cash
    * Interest received
    Cash= FV x Stated Rate x Time
    Inv. Rev= Carrying Value x
    Effective Rate x Time
    Cash Inv. Rev =
    Discount/Premium

    Cash
    Discount
    Inv. Rev
    Cash
    Inv. Rev
    Premium

    Or

    (income statement)

    or:
    Unrealized Loss
    (income statement)

    Investment

    (balance sheet, other


    comprehensive income)

    or:
    Unrealized Loss
    (balance sheet, other
    comprehensive income)

    Investment

    *Record our share of their


    Net Income (year-end)
    Investment
    Investment rev
    (reverse trans. if loss)

    * Excess depreciation
    Investment rev
    Investment
    (or reverse if less than 0)

    * Sold
    Cash
    Loss on sale of inv.
    Investment
    Or:
    Cash
    Gain on sale of inv.
    Investment

    * Sold
    Cash
    Loss on sale of inv.
    Investment
    Unrealized loss (BS)

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