ch17 - CHAPTER 17 17 INVESTMENTS (All appendices included)

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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 (All appendices included) (All appendices included) Intermediate Accounting I Intermediate Accounting I Prof. Volkan Muslu Prof. Volkan Muslu
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Chapter 17-2 Investments in Debt Investments in Debt Securities Securities Investments in Investments in Equity Securities Equity Securities Other Reporting Other Reporting Issues Issues Held-to-maturity Held-to-maturity securities securities Available-for-sale Available-for-sale securities securities Trading securities Trading securities Holdings of less than Holdings of less than 20% 20% Holdings between 20% Holdings between 20% and 50% and 50% Holdings of more than Holdings of more than 50% 50% Fair value option Fair value option Impairment of value Impairment of value Reclassification Reclassification adjustments adjustments Transfers between Transfers between categories categories Fair value Fair value controversy controversy Summary Summary Investments Investments
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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 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 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. Investments in Debt Securities 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 Held-to-Maturity Securities Held-to-Maturity Securities Classify a debt security as held-to-maturity only if there is 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. Debt Debt Securities Securities
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Chapter 17-7 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 Held-to-Maturity Securities
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Chapter 17-8 LO 2 Illustration 17-3 Schedule of Interest Revenue and Bond Discount Amortization Effective-Interest Method Held-to-Maturity Securities Held-to-Maturity Securities
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Chapter 17-9 KC Company records the receipt of the first two semiannual interest payments, as
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This note was uploaded on 02/14/2011 for the course AIM 6330 taught by Professor Volkanmuslu during the Spring '10 term at University of Texas at Dallas, Richardson.

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ch17 - CHAPTER 17 17 INVESTMENTS (All appendices included)

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