Chapter 12, Problem 12.4BYP

a)

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.

Held-to-maturity security: The debt securities which are held by the investor with the intent to hold the investment till its maturity are referred to as held-to-maturity securities.

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.

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.

To Examine: The Note 17 and 18 of annual reports of Company U, and discuss how Company U accounts for unrealized gains and losses on each of the investment.

b)

To determine

To Examine: The Note 17A of Company U, and discuss on what lines do the investments appear.

c)

To determine

To Explain: The accounting followed by Company U for HTM  investment.