Chapter 10, Problem 10.1CTFSC

1.

To determine

Trading Investments:

Trading investments are the investments in debt or equity securities where the investor holds less than 20% of the voting stock. The investor wishes to sell these investments at a short notice like in a few days, week, or months to generate some profit out of it. They are treated as current assets.

Available-for-sale investments:

Available-for-sale investments are the investments in debt or equity securities, where the investor wishes to holds less than 20% of voting stock, and neither referred as trading or hold-to-maturity investments. For debt securities, the investor do not wish to hold it till maturity, and hence reported either as current assets or as long-term assets in the balance sheet depending upon the holding period of the security.

Unrealized-gain or Unrealized-loss:

Unrealized-holding gain or loss occurs when the investor company record the investments at its fair value, in its financial statements, without disposing (selling) them. When the cost of the investment is lesser than the fair value of the investment, then it is unrealized-gain. On the contrary, when the cost of the investment is greater than the fair value of the investment, then it is unrealized-loss.

To list out: The classifications of debt and/or equity security investments do the Corporation S hold.

2.

To determine

To give: The breakdown of the short-term and long-term investments of Corporation S held at September 29, 2013.

3.

To determine

To identify: Each item related to the company’s debt and equity security investments, the amount of the item, and the section of the cash flow statement in which the item appears.

4.

To determine

To identify: The way in which Corporation S’s available-for-sale investments and trading investments reported.