Investments: Companies invest in stocks and bonds of other companies or governmental entity to deploy their excess fund, and/or for a specific business strategy. Held-to-maturity security : The debt securities which are held by the investor with intent to hold the investment till its maturity are referred to as held-to-maturity securities. Trading securities : These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices. Fair value : Fair value is the price at which, both seller and buyer agree to exchange the asset. So, fair value is the selling price to the seller and the purchase price for the buyer. Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. To Explain: How to classify this investment on Company T’s balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other.
Investments: Companies invest in stocks and bonds of other companies or governmental entity to deploy their excess fund, and/or for a specific business strategy. Held-to-maturity security : The debt securities which are held by the investor with intent to hold the investment till its maturity are referred to as held-to-maturity securities. Trading securities : These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices. Fair value : Fair value is the price at which, both seller and buyer agree to exchange the asset. So, fair value is the selling price to the seller and the purchase price for the buyer. Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. To Explain: How to classify this investment on Company T’s balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other.
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
Chapter 12, Problem 12.25E
1.
To determine
Investments: Companies invest in stocks and bonds of other companies or governmental entity to deploy their excess fund, and/or for a specific business strategy.
Held-to-maturity security: The debt securities which are held by the investor with intent to hold the investment till its maturity are referred to as held-to-maturity securities.
Trading securities: These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Fair value: Fair value is the price at which, both seller and buyer agree to exchange the asset. So, fair value is the selling price to the seller and the purchase price for the buyer.
Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.
Debit and credit rules:
Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To Explain: How to classify this investment on Company T’s balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other.
2.
To determine
To journalize: The purchase $240,000,000 of 6% bonds in the books of Company T.
3.
To determine
To journalize: The receipt of semiannual interest on December 31, 2018 in the books of Company T.
4.
To determine
To journalize: The fair value changes to be recorded in the books of Company T.
5.
To determine
To indicate: The amount of investment value as on December 31, 2018 in the books of Corporation T
6.
To determine
To journalize: The adjusting entry as at December 31, 2018, if the fair value adjustment was $9,200,000, fair value of shares was $200,00,000, and the cost of shares was $240,000,000.