iNvestments - I NVESTMENTS I. Nature of Investments A....

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INVESTMENTS I. Nature of Investments A. Current Assets or Long-term Investments on the Balance Sheet 1. To be Current, must be both Marketable and intended for sale within one year, if necessary to raise cash 2. If not current, then Long-term B. Not related to the primary business activities C. Held primarily for income II. Accounting Methods for investments in securities A. Cost /Fair value method-no significant influence. (assume if less than 20% ownership of voting stock) B. Equity method-significant influence. (assume 20% or more of voting stock) C. Consolidation-control. (assume over 50% of voting stock) III. Journal entries for transactions A. Cost/Fair value method 1. Purchase Investment (cost) xxx Cash xxx 2. Income Cash xxx Investment revenue xxx 3. Sale Cash (sale price) xxx Investment (cost) xxx
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Realized Loss or Gain xxx xxx B. Equity method 1. purchase Investment xxx Cash xxx 2. dividend received Cash xxx Investment Xxx 3. investor’s % x investee’s income Investment xxx
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This note was uploaded on 12/13/2010 for the course ACCT 112 taught by Professor King during the Spring '08 term at Howard County Community College.

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iNvestments - I NVESTMENTS I. Nature of Investments A....

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