1.
To identify: The type of companies does Incorporation BH own.
2.
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.
The amounts which the Incorporation BH holds in available-for-sale, and held-to-maturity investments.
3.
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 identify: Each item related to the company’s debt and equity security investments, the amount of the item, and the section of the
4.
To identify: The manner in which the Incorporation BH uses fair value measurements in regard to its investments.
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Chapter 10 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters, Student Value Edition (5th Edition)
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