tailieunhanh - Lecture Accounting principles – Chapter 16: Investments

In this chapter students will be able to: Identify reasons to invest, and classify investments, account for debt instruments that are reported at amortized cost, account for trading investments, account for strategic investments, indicate how investments are reported in the financial statements. | Investments Classifying investments Non-strategic versus strategic Accounting for debt investments reported at amortized cost Money-market instruments and bonds Accounting for trading investments Equity investments - common shares Debt investments - bonds Accounting for strategic investments Fair value Equity method Cost method Reporting of investments Copyright John Wiley & Sons Canada, Ltd. 2 CHAPTER 16: Investments Identify reasons to invest, and classify investments. Account for debt instruments that are reported at amortized cost. Account for trading investments. Account for strategic investments. Indicate how investments are reported in the financial statements. Copyright John Wiley & Sons Canada, Ltd. 3 Classifying Investments Corporations can invest in: Debt instruments: term deposits, treasury bills, bonds Equity instruments: preferred and common shares of another company Reasons to invest: Non-strategic investments: generate investment income Strategic investments: to establish or maintain a long-term relationship with another company Copyright John Wiley & Sons Canada, Ltd. 4 Classified and reported based on: Purpose of investment – more important Whether investment is debt or equity IFRS and ASPE generally follow similar rules Some differences Non-Strategic Investments Copyright John Wiley & Sons Canada, Ltd. 5 Strategic Investments Only equity securities can be strategic Provide some level of influence over investment Percentage ownership or degree of influence determines how investment is classified Strategic investments are always long-term Copyright John Wiley & Sons Canada, Ltd. 6 CHAPTER 16: Investments Identify reasons to invest, and classify investments. Account for debt instruments that are reported at amortized cost. Account for trading investments. Account for strategic investments. Indicate how investments are reported in the financial statements. Copyright John Wiley & Sons Canada, Ltd. 7 Accounting for Debt Investments Reported at . | Investments Classifying investments Non-strategic versus strategic Accounting for debt investments reported at amortized cost Money-market instruments and bonds Accounting for trading investments Equity investments - common shares Debt investments - bonds Accounting for strategic investments Fair value Equity method Cost method Reporting of investments Copyright John Wiley & Sons Canada, Ltd. 2 CHAPTER 16: Investments Identify reasons to invest, and classify investments. Account for debt instruments that are reported at amortized cost. Account for trading investments. Account for strategic investments. Indicate how investments are reported in the financial statements. Copyright John Wiley & Sons Canada, Ltd. 3 Classifying Investments Corporations can invest in: Debt instruments: term deposits, treasury bills, bonds Equity instruments: preferred and common shares of another company Reasons to invest: Non-strategic investments: generate investment income Strategic investments: to .