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ch17.pdf solutions

# ch17.pdf solutions - CHAPTER 17 Investments ASSIGNMENT...

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17-1 CHAPTER 17 Investments ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Debt securities. 1, 2, 3, 13 1 4, 7 (a) Held-to-maturity. 4, 5, 7, 8, 10, 13, 21 1, 3 1, 2, 3, 5 1, 7 4 (b) Trading. 4, 6, 7, 8, 10, 21 4 1, 4 (c) Available-for-sale. 4, 7, 8, 9, 10, 11, 21 2, 10 4 1, 2, 3, 4, 7 1, 4 2. Bond amortization. 8, 9 1, 2, 3 3, 4, 5 1, 2, 3 3. Equity securities. 1, 12, 13, 16 4, 7 (a) Available-for-sale. 7, 10, 11, 15, 21 5, 8 6, 8, 9, 11, 12, 16 5, 6, 8, 9, 10, 11, 12 1, 2, 3 (b) Trading. 6, 7, 8, 14, 15, 21 6 6, 7, 14, 15 6, 8 1, 3 (c) Equity method. 16, 17, 18, 19, 20 7 12, 13, 16, 17 8 5, 6 4. Comprehensive income. 22 9 10 10, 12 5. Disclosures of investments. 21 8, 9 5, 9, 10, 11, 12 6. Impairments. 24 10 18 3 7. Transfers between categories. 23 1, 3, 7 *8. Derivatives 25, 26, 27, 28, 29, 30, 31, 32 19, 20, 21, 22, 23, 24 13, 14, 15, 16, 17, 18 *9. Variable Interest Entities 33, 34 *This material is dealt with in an Appendix to the chapter.

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17-2 ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives Brief Exercises Exercises Problems 1. Identify the three categories of debt securities and describe the accounting and reporting treatment for each category. 1 2. Understand the procedures for discount and premium amortization on bond investments. 1, 2, 3, 4 2, 3, 4, 5 1, 2, 3, 4, 7 3. Identify the categories of equity securities and describe the accounting and reporting treatment for each category. 5, 6, 8 1, 6, 7, 8, 9, 11, 12, 14, 15, 16 3, 5, 6, 8, 9, 10, 11, 12 4. Explain the equity method of accounting and compare it to the fair value method for equity securities. 7 12, 13, 16, 17 8 5. Describe the disclosure requirements for investments in debt and equity investments. 9 10 8, 9, 10, 12 6. Discuss the accounting for impairments of debt and equity investments. 10 18 7. Describe the accounting for transfer of investment securities between categories. *8. Explain who uses derivatives and why. *9. Understand the basic guidelines for accounting for derivatives. *10. Describe the accounting for derivative financial instruments. 19, 20, 21 13, 14, 15 *11. Explain how to account for a fair value hedge. 22, 23, 24 16, 18 *12. Explain how to account for a cash flow hedge. 17
17-3 ASSIGNMENT CHARACTERISTICS TABLE Item Description Level of Difficulty Time (minutes) E17-1 Investment Classifications. Simple 5–10 E17-2 Entries for held-to-maturity securities. Simple 10–15 E17-3 Entries for held-to-maturity securities. Simple 15–20 E17-4 Entries for available-for-sale securities. Simple 10–15 E17-5 Effective-interest versus straight-line bond amortization. Simple 20–30 E17-6 Entries for available-for-sale and trading securities. Simple 10–15 E17-7 Trading securities entries. Simple 10–15 E17-8 Available-for-sale securities entries and reporting. Simple 5–10 E17-9 Available-for-sale securities entries and financial statement presentation. Simple 10–15 E17-10 Comprehensive income disclosure. Moderate 20–25 E17-11 Equity securities entries. Simple 20–25 E17-12 Journal entries for fair value and equity methods. Simple 15–20 E17-13 Equity method. Moderate 20–25 E17-14 Equity investment—trading. Moderate 20–25 E17-15 Equity investment—trading. Moderate 15–20 E17-16 Fair value and equity method compared. Simple 15–20 E17-17 Equity method.

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