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Intermediate Accounting

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In my current position as a general ledger accountant for homeowner associations we deal  lightly with investments. The associations that we manage are strictly governed by CA Civil  Code and are all NPOs. Per CA Civil Code, the associations are only to invest in CDs and utilize  Money Market accounts. That being said, I can still appreciate what we learned in this chapter  and see a slight relationship with the debt securities. The CDs that the associations invest in  share some similar qualities to Held-to-maturity securities as the associations do not actively  trade or sell the CDs and typically hold the CDs until maturity. To list a few similarities- CDs  earn interest as do bonds, and CDs have a maturity date.  Similarly we do account for interest  revenue and it is shown on the balance sheet under current assets, and the CDs are shown 
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Unformatted text preview: under long-term assets. The earned Interest revenue is recognized as a part of other revenues. However, accounting for CDs is simple because it is not necessary to amortize any premiums or discounts as most CDs are purchased at face value. I believe this chapter would be very beneficial in the future because the majority of for-profit companies do participate in trading stocks, bonds, and other securities. In my opinion what we have learned in chapter 17 in regards to proper reporting, recording, and valuation of investments is the necessary basis of investment management. The different methods of reporting and valuation all have their uses which are to accurately representing company’s condition. Obviously the selection of which method to utilize for each financial instrument is also very important....
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