marketable securities

marketable securities - 2009-11-161MARKETABLE...

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Unformatted text preview: 2009-11-161MARKETABLE SECURITIES2009-11-16Marketable Securities Topic Slides22009-11-1622009-11-16Marketable Securities Topic Slides3Description of Marketable SecuritiescConsist of corporate and government bonds and common/preferred corporate stockcVery liquid (easy to convert into cash)cListed on the balance sheet as a current or long-term asset (according to managements intent)cNote: Business 2257 will not cover bonds held to maturity and will focus on the available-for-sale method of accounting for stocks.2009-11-16Marketable Securities Topic Slides4M/S StockscTo record purchase, include price of stocks and any other related fees (e.g., broker fees):DRMarketable SecuritiesStocksCRCashcDividend revenue is only recognized when dividend cheques are actually received (date of payment):DRCashCRDividend RevenuecShares from stock splits or stock dividends are not recorded as revenue (just update the number of shares owned on date of distribution).2009-11-163M/S Stocks (cont.)cAt fiscal year end, adjust the M/S stocks account to market value by creating a contra asset valuation account and an Unrealized gains and losses shareholders equity account.cFor stocks where the market value at fiscal year end is lower than cost:DRM/SStock Unrealized Gains & LossesCRM/SStock Valuation AllowancecWhen the market value is higher than cost:DRM/SStock Valuation AllowanceCRM/SStock Unrealized Gains & Losses2009-11-16Marketable Securities Topic Slides52009-11-16Marketable Securities Topic Slides6M/S BondscRecord purchase price and any other related (e.g., broker fees):DRMarketable SecuritiesBonds...
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This note was uploaded on 11/09/2010 for the course BUSINESS 2257 taught by Professor Iandunn during the Fall '10 term at UWO.

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marketable securities - 2009-11-161MARKETABLE...

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