Appendix H class notes Kimmel

Accounting: Tools for Business Decision Making

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Appendix H Investments Short-term vs. Long-term (for Balance Sheet classification) Short-term (current asset) Must be marketable (publicly traded) AND Intend to sell within one year. Long-term All other All investments are recorded at cost including commissions. Investments in Debt Securities (Notes, Bonds) Called “held-to-maturity” investments if company intends to and is able to hold until maturity, otherwise classified as “available for sale” investment. Reported at cost, net of unamortized discount or premium. o No adjustment for changes in market value if “held-to- maturity” investment. o Include in portfolio market adjustment if “available for sale” investment. (See equity securities on next page.) Report interest revenue as it is earned. 1
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Investments in Equity Securities Control Accounting During the Year Accounting at Year End No Influence Less than 20% ownership (usually classified as Available for Sale) Use the Cost Method Dividends received
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Appendix H class notes Kimmel - 1 Appendix H Investments...

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