ACCT_3280_S12_Week_8_Notes_Chapter_18

ACCT_3280_S12_Week_8_Notes_Chapter_18 - ACCT 3280...

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ACCT 3280 – INTERMEDIATE ACCOUNTING I WEEK 8 NOTES – Accounting for debt and Share Investments Introduction: This chapter focuses on the recording reporting of investments in debt and shares. Many companies have investments in the form of debt and shares issued by other companies. Our understanding of these topics is important for our ability to read and interpret financials statements. This knowledge is the type used by investors for decision making in shares and bonds. Learning Objectives: 1. Describe and explain the purpose of debt and share investments. 2. Identify and describe the investment classifications. 3. Account for and report held-to-trading investments. 4. Account for and report held-to-maturity investments and investments in loans and receivables. 5. Account for investments in associates. 6. Describe the accounting for business combinations and joint venture investments. Lesson Notes: 1. Log onto Connect at www.mcgrawhill.connect.ca and utilize practice quizzes. 2. Complete Chapter lab at LYRYX online site prior to assignment deadline. Classification of Investments(LO2) 1. Passive investments—classified further into four types: 1. Held-for trading investments -shares or debt of another corporation purchased for the short term. These securities are traded actively and profits (or losses) result from changes in market value. These investments may earn dividends or interest secondarily. 2. Held-to-maturity investments -debt securities where interest and maturity date is stated and the intention is to hold these securities until the maturity date. Shares have no maturity date, so cannot be included in this category. 3. Loan and receivable investments -have fixed and determinable payments, are not quoted in
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an active market, and include loan assets, trade receivables and investments in debt instruments.
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