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Lecture Intermediate accounting - Chapter 12: Investments

In this chapter you will learn about various approaches used to account for investments that companies make in the debt and equity of other companies. An investing company always has the option to account for these investments at fair value, with changes in fair values reported on the income statement. | Investments Chapter 12 Chapter 12: Investments In this chapter you will learn about various approaches used to account for investments that companies make in the debt and equity of other companies. An investing company always has the option to account for these investments at fair value, with changes in fair values reported on the income statement. Nature of Investments Bonds and notes (Debt securities) Common and preferred stock (Equity securities) Investments can be accounted for in a variety of ways, depending on the nature of the investment relationship. To finance its operations, and often the expansion of those operations, a corporation raises funds by selling equity securities (common and preferred stock) and debt securities (bonds and notes). These securities, also called financial instruments, are purchased as investments by individual investors, mutual funds, and also by other corporations. Our focus in this chapter is on the corporations that invest in securities issued by other corporations as well as those issued by governmental units (bonds, Treasury bills, and Treasury bonds). Reporting Categories for Investments To finance its operations, and often the expansion of those operations, a corporation raises funds by selling equity securities (common and preferred stock) and debt securities (bonds and notes). These securities are purchased as investments by individual investors, mutual funds, and also by other corporations. In later chapters we discuss equity and debt securities from the perspective of the issuing company. Our focus in this chapter is on the corporations that invest in debt and equity securities issued by other corporations as well as debt securities issued by governmental units (bonds, Treasury bills, and Treasury bonds). Most companies invest in financial instruments issued by other companies. For some investors, these investments represent ongoing affiliations with the companies whose securities are acquired. Investor Lacks . | Investments Chapter 12 Chapter 12: Investments In this chapter you will learn about various approaches used to account for investments that companies make in the debt and equity of other companies. An investing company always has the option to account for these investments at fair value, with changes in fair values reported on the income statement. Nature of Investments Bonds and notes (Debt securities) Common and preferred stock (Equity securities) Investments can be accounted for in a variety of ways, depending on the nature of the investment relationship. To finance its operations, and often the expansion of those operations, a corporation raises funds by selling equity securities (common and preferred stock) and debt securities (bonds and notes). These securities, also called financial instruments, are purchased as investments by individual investors, mutual funds, and also by other corporations. Our focus in this chapter is on the corporations that invest in securities issued by