Chapter 12 The income statement reports changes in fair value for Trading Securities . The shareholders’ equity section of the balance sheet reflects changes in the fair value of Securities Available for Sale . Held-to-Maturity Securities completely exclude equity securities. If the fair value of equity securities is not determinable and the equity method is not appropriate, the securities should be reported at Cost . Investments in securities to be held for an unspecified period of time are reported at Fair Value . All investment securities are initially recorded at Cost . For trading securities, unrealized holding gains and losses are included in earnings on each reporting date . On the statement of cash flows, inflows and outflows of cash from buying and selling available for sale securities are considered investing activities. The equity method of accounting for investments in voting common stock is appropriate when the investor can significantly influence the investee . When using the equity method to account investments, cash dividends rec. by the investor should be recorded as a reduction in the
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This note was uploaded on 10/24/2010 for the course BA 300 taught by Professor Gwin during the Spring '08 term at San Diego State.