CH-12 PPT - Slide 12-1 Chapter 12 Investments Investments...

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Unformatted text preview: Slide 12-1 Chapter 12 Investments Investments Financial Accounting, Seventh Edition Slide 12-2 Why Why Corporations Corporations Invest Invest Why Why Corporations Corporations Invest Invest Cash Cash management management Investment Investment income income Strategic Strategic reasons reasons Accounting for Accounting for Debt Debt Investments Investments Accounting for Accounting for Debt Debt Investments Investments Accounting for Accounting for Stock Stock Investments Investments Accounting for Accounting for Stock Stock Investments Investments Valuing and Valuing and Reporting Reporting Investments Investments Valuing and Valuing and Reporting Reporting Investments Investments Categories of Categories of securities securities Balance sheet Balance sheet presentation presentation Realized and Realized and unrealized gain unrealized gain or loss or loss Classified Classified balance sheet balance sheet Holdings of less Holdings of less than 20% than 20% Holdings Holdings between 20% between 20% and 50% and 50% Holdings of more Holdings of more than 50% than 50% Recording Recording acquisition of acquisition of bonds bonds Recording bond Recording bond interest interest Recording sale Recording sale of bonds of bonds Investments Investments Investments Investments Slide 12-3 Corporations generally invest in debt or stock securities for one of three reasons. Why Corporations Invest Why Corporations Invest Why Corporations Invest Why Corporations Invest SO 1 Discuss why corporations invest in debt and stock securities. SO 1 Discuss why corporations invest in debt and stock securities. 1. Corporation may have excess cash . 2. To generate earnings from investment income . 3. For strategic reasons . Illustration 12-1 Temporary investments and the operating cycle Slide 12-4 Pension funds and banks regularly invest in debt and stock securities to: a. house excess cash until needed. b. generate earnings. c. meet strategic goals. d. avoid a takeover by disgruntled investors. Question Question Why Corporations Invest Why Corporations Invest Why Corporations Invest Why Corporations Invest SO 1 Discuss why corporations invest in debt and stock securities. SO 1 Discuss why corporations invest in debt and stock securities. Slide 12-5 Accounting for Debt Instruments Accounting for Debt Instruments Accounting for Debt Instruments Accounting for Debt Instruments SO 2 Explain the accounting for debt investments. SO 2 Explain the accounting for debt investments. Recording Acquisition of Bonds Cost includes all expenditures necessary to acquire these investments, such as the price paid plus brokerage fees (commissions), if any....
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CH-12 PPT - Slide 12-1 Chapter 12 Investments Investments...

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