Professional Documents
Culture Documents
Ch.12
Spiceland 7th ed.
Reporting Investments
Held-to-maturity Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Purchase Investments Purchased Halt Monsters 12%, 3-year bonds for $666,633 to
July 1, 2013
yield an effective interest rate of 14%.(HTM)
Held-to-maturity Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Purchase Investments Purchased Halt Monsters 12%, 3-year bonds for $666,633 to
July 1, 2013
yield an effective interest rate of 14%.(HTM)
Receive Investment
Received a semi-annual cash interest payment of $42,000
Revenue
from Halt Monster.
December 31, 2013
Held-to-maturity
Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Purchase Investments Purchased Halt Monsters 12%, 3-year bonds for $666,633 to
July 1, 2013
yield an effective interest rate of 14%.(HTM)
Adjust Investments
Valued the Halt Monsters bonds at $714,943.
to Fair Value December
31, 2013
T.S. Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
T.S. Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Receive Investment
Revenue
December 31, 2013
T.S. Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Adjust Investments
Valued the Tech Soft stock at $1,450,000.
to Fair Value December
31, 2013
Available-for-Sale Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Available-for-Sale Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Adjust Investments
Valued the Apple-4-Souls stock at $990,000.
to Fair Value December
31, 2013
F/S Reporting
2013
Comprehensive Income Statement:
Other income (expense):
Interest and dividend income
Realized and unrealized gains
and losses on investments
Net income
Other Comprehensive Income
Balance Sheet
Assets:
Trading securities(CA)
Available for Sale (NCA)
HTM
Statement of Cash Flows (direct method)
Operating Activities:
_________________________
_________________________
_________________________
Investing Activities
_______________________________
_______________________________
Financing Activities
_______________________________
_______________________________
2014
It is presumed as follows:
Reporting Method
Has control
(usually > 50% equity ownership)
Consolidation
Equity method
Exceptions
1.the investee challenges the investors ability to exercise significant influence
through litigation or other methods.
2.the investor surrenders significant shareholder rights in a signed agreement.
3.the investor is unable to acquire sufficient information about the investee to
apply the equity method.
4.the investor tries and fails to obtain representation on the board of directors
of the investee.
Held-to-maturity Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Purchase Investments Purchased Halt Monsters 12%, 3-year bonds for $666,633 to
July 1, 2013
yield an effective interest rate of 14%.(HTM)
Sell Investments
January 15, 2014
T.S. Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Sell Investments
January 15, 2014
Available-for-Sale Investment
Investa, Inc. buys and sells both debt and equity securities of other companies as
investments. Uniteds fiscal year-end is December 31. The following events during
2013 and 2014 pertain to the investment portfolio.
Sell Investments
Sold Apple-4-Soul stock at $985,000.
January 15, 2014
Sell Investments
January 15, 2014
temporary