chapter 17

chapter 17 - CHAPTER 17 17 INVESTMENTS...

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Chapter 17-1 C H A P T E R C H A P T E R 17 17 INVESTMENTS INVESTMENTS Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield
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Chapter 17-2 1. Identify the three categories of debt securities and describe the accounting and reporting treatment for each category. 2. Understand the procedures for discount and premium amortization on bond investments. 3. Identify the categories of equity securities and describe the accounting and reporting treatment for each category. 4. Explain the equity method of accounting and compare it to the fair value method for equity securities. 5. Describe the accounting for the fair value option. 6. Discuss the accounting for impairments of debt and equity investments. 7. Explain why companies report reclassification adjustments. 8. Describe the accounting for transfer of investment securities between categories. Learning Objectives Learning Objectives
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Chapter 17-3 Different motivations for investing: To earn a high rate of return. To secure certain operating or financing arrangements with another company. Investment Accounting Approaches
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Chapter 17-4 Companies account for investments based on the type of security (debt or equity) and their intent with respect to the investment. Investment Accounting Approaches Illustration 17-1
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Chapter 17-5 LO 1 Identify the three categories of debt securities and describe the accounting and reporting treatment for each category. Debt securities (creditor relationship): Investments in Debt Securities U.S. government securities Municipal securities Corporate bonds Convertible debt Commercial paper Type Held-to-maturity Trading Available-for-sale Accounting Category
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Chapter 17-6 LO 1 Identify the three categories of debt securities and describe the accounting and reporting treatment for each category. Investments in Debt Securities Accounting for Debt Securities by Category Illustration 17-2
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Chapter 17-7 Held-to-Maturity Securities Classify a debt security as held-to-maturity only if it has both (1) the positive intent and (2) the ability to hold securities to maturity. Accounted for at amortized cost , not fair value. Amortize premium or discount using the effective-interest method unless the straight-line method yields a similar result. LO 2 Understand the procedures for discount and premium amortization on bond investments.
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Chapter 17-8 LO 2 Understand the procedures for discount and premium amortization on bond investments. Illustration: KC Company purchased $100,000 of 8 percent bonds of Evermaster Corporation on January 1, 2009, at a discount, paying $92,278. The bonds mature January 1, 2014 and yield 10%; interest is payable each July 1 and January 1. KC records the investment as follows: January 1, 2009 Held-to-Maturity Securities 92,278 Cash 92,278 Held-to-Maturity Securities
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Chapter 17-9 LO 2 Illustration 17-3 Schedule of Interest Revenue and Bond Discount Amortization Effective-Interest Method Held-to-Maturity Securities
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Chapter 17-10 LO 2 Understand the procedures for discount and
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chapter 17 - CHAPTER 17 17 INVESTMENTS...

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