INVESTMENTS IN DEBT AND EQUITY SECURITIES
Chapter 12
,Accounting for Marketable
Securities
LESSON 2 B
, Learning Objectives
1. Identify the three categories of debt securities and describe the accounting and reporting
treatment for each category.
2. Understand the procedures for discount and premium amortization on bond investments.
3. Identify the categories of equity securities and describe the accounting and reporting
treatment for each category.
4. Explain the equity method of accounting and compare it to the fair value method fo
equity securities.
5. Describe the accounting for the fair value option.
6. Explain why companies report reclassification adjustments.
7. Describe the accounting for transfer of investment securities between categories.
, INTRODUCTION
• Investments usually are purchased for cash and thu
have a known cost that is recorded as an asset.
• The investment typically produces an annual cash flow
of interest or dividends that can be recorded a
investment revenue
Chapter 12
,Accounting for Marketable
Securities
LESSON 2 B
, Learning Objectives
1. Identify the three categories of debt securities and describe the accounting and reporting
treatment for each category.
2. Understand the procedures for discount and premium amortization on bond investments.
3. Identify the categories of equity securities and describe the accounting and reporting
treatment for each category.
4. Explain the equity method of accounting and compare it to the fair value method fo
equity securities.
5. Describe the accounting for the fair value option.
6. Explain why companies report reclassification adjustments.
7. Describe the accounting for transfer of investment securities between categories.
, INTRODUCTION
• Investments usually are purchased for cash and thu
have a known cost that is recorded as an asset.
• The investment typically produces an annual cash flow
of interest or dividends that can be recorded a
investment revenue
