08 Investing in securities会计英语课件 复旦大学出版社 叶建芳 孙红星.ppt

Investing in Securities;Who’s in control here?;Identify the three categories of debt securities Understand the procedures for discount and premium amortization on bond investments. Identify the categories of equity securities Explain the equity method of accounting and compare it to the fair value method for equity securities. Describe the disclosure requirements for investments in debt and equity securities.;Investments in Debt Securities;Different motivations for investing: To earn a high rate of return. To secure certain operating or financing arrangements with another company.;Companies account for investments based on the type of security (debt or equity) and their intent with respect to the investment.;Debt securities (creditor relationship):;Held-to-maturity : Debt securities that the company has the positive intent and ability to hold to maturity. Trading: Debt securities bought and held primarily for sale in the near term to generate income on short-term price differences. Available-for-sale: Debt securities not classified as held-to-maturity or trading securities;Investments in Debt Securities;2 a. Held-to-Maturity Securities; E-3 On January 1, 2006, Hi and Lois Company purchased 12% bonds, having a maturity value of $300,000, for $322,744. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2006, and mature January 1, 2011, with interest receivable December 31 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Instructions (a) Prepare the journal entry at the date of the bond purchase.; (a) Prepare the journal entry at the date of the bond purchase.; (b) Prepare a bond amortization schedule.; (c) (d) Prepare the journal entry to record the interest received and the amortization for 2006 2007.;Companies report available-for-sale securities at fair value, with unrealized holding gains and losses reported