Chapter 12, Problem 12.2BYP

1.

To determine

Investment: The act of allocating money to buy a monetary asset, in order to generate wealth in the future is referred to as investment.

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs or manage interest risk.

To Locate: The annual report of a public company that includes the footnote describing the securities available for sale, using the EDGAR in the SEC website.

2.

To determine

To Identify: The caption under which the securities are reported in the comparative balance sheets and to whether they are classified as current or non-current assets.

3.

To determine

To Explain: The method of reporting the realized gains and losses, in the comparative income statement.

4.

To determine

To Explain: The method of reporting the unrealized gains and losses, in the comparative statements and the shareholder’s equity.

5.

To determine

To Explain: Under what head accumulated unrealized gains or losses identifiable in the comparative balance sheets. And the reason for not reporting them in the Income Statement.

6.

To determine

To Explain: The information provided by the changes in the cash flow of these investments in the statement of cash flow.