Investments Flashcards

1
Q

Trading debt securities

A

Are held at Market Value

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2
Q

Equity method carrying value calc

A

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

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3
Q

Dividend Revenue

A

We record div revenue if the company does not have significant influence on the company’s operations
this includes noncumulative preferred stock outstanding

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4
Q

Effective interest rate method

A

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

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5
Q

Trading Securities

A

Fair value, with holding gains/losses recorded in income

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6
Q
A
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