Warren_23e__AISE_IM_Ch15 - chapter 15 Investments and Fair...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
chapter 15 Investments and Fair Value Accounting ______________________________________________ OPENING COMMENTS Chapter 15 discusses the various ways businesses can invest excess cash with the goal of earning additional cash. These investments can include interest earned on deposits such as CDs, investment in notes and bonds, or investment in stocks. These investments can be short term or long term depending on the need of each individual business. The motivations can range from a higher return on their money than they can earn by leaving the cash in the bank to take over the control of another company. This chapter introduces the student to these various options and discusses the accounting methods for each investment. After studying the chapter, your students should be able to: 1. Describe why companies invest in debt and equity securities. 2. Describe and illustrate the accounting for debt investments. 3. Describe and illustrate the accounting for equity investments. 4. Describe and illustrate valuing and reporting investments in the financial statements. 5. Describe fair value accounting and its implications for the future. STUDENT FAQS Why are investments in stock considered equity investments and investments in bonds considered debt investments? Why do the methods of accounting change for different levels of investment in another company? Why are there so many different rules for different investments? Wouldn’t be easier if there were just one way to record investments? What does “fair value” accounting mean? 249 This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
250 Chapter 15 Investments and Fair Value Accounting This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. Why do some items get “special presentation” on the income statement? It doesn’t change the bottom line, so what difference does it make? I thought we only booked realized activities in accounting, such as revenue is recorded when realized or realizable. So why do we now record these unrealized gains and losses? Shouldn’t we wait until they are realized? Aren’t we showing unrealized gains or losses twice—once under assets along with the temporary investment and again as part of comprehensive income? Isn’t this “double dipping”? If you can show unrealized gains on some things, why can’t you show an unrealized gain when property goes up in value? IN-CLASS AND HOMEWORK ASSIGNMENT CHART
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 16

Warren_23e__AISE_IM_Ch15 - chapter 15 Investments and Fair...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online