文档介绍：Accounting Principles, 6e Weygandt, Kieso, & Kimmel
Prepared by
Marianne Bradford, .
Bryant College
John Wiley & Sons, Inc.
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After studying this chapter, you should be able to:
1 Discuss why corporations invest in debt and stock securities.
2 Explain the accounting for debt investments.
3 Explain the accounting for stock investments.
4 Describe the use of consolidated financial statements.
5 Indicate how debt and stock investments are valued and reported on the financial statements.
6 Distinguish between short-term and long-term investments.
CHAPTER 17 INVESTMENTS
PREVIEW OF CHAPTER 17
Investments
Why Corporations Invest
Accounting for Debt Investments
Recording acquisition of bonds
Recording bond interest
Recording sale of bonds
PREVIEW OF CHAPTER 17
Investments
Accounting for Stock Investments
Holdings less than 20%
Holdings between 20% and 50%
Holdings of more than 50%
Valuation and Reporting of Investments
Categories of securities
Balance sheet presentation
Realized and unrealized gain or prehensive balance sheet
STUDY OBJECTIVE 1
Discuss why corporations invest in debt and stock securities.
ILLUSTRATION 17-1 TEMPORARY INVESTMENTS AND THE OPERATING CYCLE
Cash
Temporary Investments
Accounts Receivable
Inventory
Invest
Sell
At the end of their operating cycles, panies may have temporarily idle cash on hand until the start of the next operating cycle.
panies may invest the excess funds to earn a greater return.
The relationship of temporary investments to the operating cycle is depicted below.
ILLUSTRATION 17-2 WHY CORPORATIONS INVEST
Reason
Typical Investment
To house excess cash until needed
Low-risk, high-liquidity, short-term securities such as government-issued securities
To generate earnings
I need 1,000 Treasury bills by tonight!
Debt securities (banks and other financial institutions); and stock securities (mutual funds and pension funds)
To meet strategic goals
Stocks panies in a rel