Investments Flashcards
Trading debt securities
Are held at Market Value
Equity method carrying value calc
Initial investment
plus: their share of net income (25% owned)
less: their share of dividends paid
equals End of Year carrying value
If any excess of PPE, need to calc depreciation amount and multiply by % owned. This value gets reduced from Carrying amount
Dividend Revenue
We record div revenue if the company does not have significant influence on the company’s operations
this includes noncumulative preferred stock outstanding
Effective interest rate method
Bond investment carrying amt, 7/1
Effective rate (8% yield / 2)
interest income 7/1 - 12/31
semi annual pymt ($1M x (10% / 2)
Amort on bond premium, 12/31
Trading Securities
Fair value, with holding gains/losses recorded in income