Equity Investments Flashcards
Brokerage Fees for Equity Investment
Included in the initial investments then deducted from sale
What value to you record Equity Securities
Fair Value usually always
Costs associated with determining FV - Equity Investments
Not taken in consideration when assessing whether FV is determinable
When can you use cost method for Equity
When there are no FV quotations
What Effects Investment Income under Equity Method
Excess of FV over CV
Dividends NEVER increase investment Account
Dividends NEVER increase investment Account
AFS Securities & Credit Losses
Decline is FV associated with a credit loss should be reclassified to earnings
Trading securities bought between interest dates
Just recorded at FV. not FV plus any interest
Bond questions with Accrued Interest
Deduct from Amortized or Premium amount to calculate
Interest revenue – Stated or cash interest = Discount amortizations
Interest revenue – Stated or cash interest = Discount amortizations
Investment in Stock Rights Calculations
[Stock Right/(Stock right + Value Per Share)] multiplied by original purchase
Stock Dividends under Cost or Equity Method
Not recognized in the accounts at receipt, at fair value or any other value. Rather, they reduce the cost per share under both methods. The original cost is spread over more shares.
Stock Dividend and Cash Dividend
Stock Dividend isn’t revenue, but cash dividend is
Are trading, AFS, and HTM considered debt or equity
They are no longer considered equity, but rather debt
