会计学原理英文课件-(15).ppt
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- 会计学 原理 英文 课件 15
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1、15-1PowerPoint Authors:Susan Coomer Galbreath,Ph.D.,CPACharles W.Caldwell,D.B.A.,CMAJon A.Booker,Ph.D.,CPA,CIACynthia J.Rooney,Ph.D.,CPACopyright 2013 by The McGraw-Hill Companies,Inc.All rights reserved.Investments and International OperationsChapter 1515-2Basics of Investments1.Companies transfer
2、excess cash into investments to produce higher income.2.Some companies are set up to produce income from investments.3.Companies make investments for strategic reasons.Motivation for InvestmentsC115-3Investments of Selected CompaniesShort-Term(S-T)and Long-Term(L-T)Investments as a Percent of Total
3、AssetsC115-4Short-Term InvestmentsC1Short-term investments are securities that:Management intends to convert to cash within one year or the operating cycle,whichever is longer.Are readily convertible to cash.Short-term investments do not include cash equivalents.Cash equivalents are investments that
4、 are both readily converted to known amounts of cash and mature within three months.15-5Long-Term InvestmentsLong-term investments:are not readily convertible to cash.are not intended to be converted to cash in the short term.are reported in the noncurrent section of the balance sheet,often in its o
5、wn category.C115-6Debt Securities versus Equity SecuritiesDebt Securities Reflect a creditor relationship Examples:Investments in notes,bonds,and CDs May be issued by governments,companies,or individualsC1Equity Securities Reflect an owner relationship Examples:Investments in shares of stock Issued
6、by companies15-7Classification and ReportingC1Accounting for Investments depends on three factors:1.Security type:debt or equity 2.Intent to hold the security short or long term3.Percentage ownership in another companys equity securities15-8Debt Securities:Accounting BasicsDebt securities are record
7、ed at cost when purchased.Interest revenue for investments in debt securities is recorded when earned.On September 1,2012,Music City paid$29,500 plus a$500 brokerage fee to buy Dells 7%,2-year bonds payable with a$30,000 par value.The bonds pay interest semiannually on August 31st and February 28th.
8、Music City plans to hold the bonds until they mature(HTM securities).P215-9Debt Securities:Accounting BasicsInterest earned but not received must be accrued on December 31,2012.$30,000 par value 7%4/12=$700 interest earned.P215-10Debt Securities:Accounting BasicsOn February 28,2013,Music City will r
9、ecord the receipt of the semiannual interest.The companys accountants will make the following entry.$30,000 par value 7%6/12=$1,050(Interest received).P2$30,000 par value 7%4/12=$700(Interest earned in 2012).$30,000 par value 7%2/12=$350(Interest earned in 2013).15-11Debt Securities:Accounting Basic
10、sWhen the bonds mature,Music City will receive the amount of the par value in cash.The bonds have now been retired.P215-12Equity Securities:Accounting Basics Equity securities are recorded at cost when acquired,including commissions or brokerage fees paid.Any cash dividends received are credited to
11、Dividend Revenue and reported in the income statement.When the securities are sold,sales proceeds are compared with cost,and any gain or loss is recorded.P115-13Equity Securities:Accounting Basics On October 10,2012,Music City purchases 1,000 shares of Intex common stock for$86,000 in the open marke
12、t.The securities are classified by management of Music City as“available-for-sale”(AFS)securities.P315-14Equity Securities:Accounting Basics On November 2,Music City receives a$1,720 quarterly dividend on its investment in Intex.P315-15Equity Securities:Accounting Basics On December 20,Music City se
13、lls 500 shares of Intex in the open market for$45,000.Calculate original cost per share:$86,000 1,000 shares=$86.00 per share cost.Calculate cost of shares sold:500 shares$86=$43,000.P315-16Trading Securities1.Debt and equity securities2.Actively managed and traded for profit3.Frequent purchases and
14、 sales expected4.Reported at fair value5.Unrealized gain or loss reported in the income statementP115-17TechComs portfolio of trading securities had a total cost of$11,500,and a fair value of$13,000,on December 31,2012,the first year the securities were held.The$1,500 difference between the cost of$
15、11,500 and the fair value of$13,000 is an unrealized gain.Trading SecuritiesP115-18Assume TechCom sells trading securities that had cost$1,000 for$1,200 cash,on January 9,2013.Trading SecuritiesThe gain is reported in the Other Revenues and Gains section of the Income Statement.Likewise,a loss would
16、 be reported in Other Expenses and Losses section.P115-19Held-to-Maturity Securities1.Debt securities2.Intent and ability to hold until maturity3.Reported as:a)Current assets if their maturity dates are within one year or the operating cycle,whichever is longer.b)Noncurrent investments if their matu
17、rity dates are longer than one year or the normal operating cycle,whichever is longer.The portfolio of HTM securities is reported at amortized cost.There is no fair value adjustment to the portfolio.P215-20Available-for-Sale Securities1.Debt and equity securities not classified as trading or held-to
18、-maturity 2.Not actively managed 3.Report as:a)Short-term investments if the intent is to sell the securities within one year or the normal operating cycle,whichever is longer.b)Long-term investments if securities do not meet short-term investment criteria.4.Valued at fair value5.Unrealized gains or
19、 loss reported in the equity section of the balance sheet as part of comprehensive incomeP315-21Available-for-Sale SecuritiesMusic City had no prior investments.In the current period,it acquired two available-for-sale securities.At December 31,2012,the following information is provided:P315-22Availa
20、ble-for-Sale SecuritiesMusic CityPartial Balance SheetDecember 31,2012Assets Long-term investmentsAFS(at cost)$73,000 Fair value adjustmentAFS 1,550 Long-term investmentsAFS(at fair value)$74,550 Equity Add unrealized gain on AFS securities$1,550 P315-23Available-for-Sale SecuritiesLets extend our e
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