基础会计(英文版)(第二版)Chapter 15 Corporation as an Investor Investments in Corporate Securities.ppt

Chapter 15 Corporation as an Investor: Investments in Corporate Securities Nature of Investments Accounting for Investments in Bonds Assume that on August 1 Guangli Co. Ltd purchased 10 000 yuan, 9% bonds of Baiyun Co. which pays interest on June 1 and December 1. Guangli Co. Ltd bought the bonds on August 1, at the price of 98, plus a brokerage commission of 50 yuan and two months’ accrued interest of 150 yuan. Accounting for Investments in Bonds Investment in Bonds 9 850 Bond Interest Receivable 150 Cash 10 000 Accounting for Investments in Bonds On December 1, the semiannual interest payment date, Guangli Co. Ltd will record the interest revenue as follows: Cash 450 Bonds Interest Receivable 150 Bonds Interest Revenue 300 Accounting for Investments in Bonds When classified as current assets, no amortization of bond premium or discount When classified as long-term assets, need to amortize the premium or discount. Amortization of a discount will increase the amount of interest revenue recognized by the investor; amortization of a premium will reduce the amount of interest revenue recognized. Accounting for Investments in Bonds When bonds are sold by the investor, any gain or loss caused by the sale should be recognized and recorded. Accounting for Investments in Stocks Purposes of investment Investment for income Investments for purpose of influence or control Investments for Income- the Cost Method On September 15, 20×5, Guangli Co. Ltd purchased 10 000 shares of common stock of Shenfa Co., which is selling for 16.25 yuan per share plus a broker’s commission of 500 yuan. Let’s look at the journal entry to record the acquisition by using the cost method. Investments for Income- the Cost Method On October 1, Shenfa Co. declares a 1 yuan per share cash dividend to stockholders of record on October 20, payable October 30. Investments for Income- th