Investment in Debt securities: Debt securities are financing instrument which represents the loan taken from the lender and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits, preferred stock , corporate bonds etc. The investment in debt securities is classified under following categories: Held to maturity: Held to maturity is a type of debt investment that the investor intends to hold until maturity. These securities are recorded at amortized cost. Trading: Trading securities are purchased by the investor for the purpose to sell within a short-term period to each profit. These securities are recorded at their fair value and any gain or loss is recognized in the income statement for that period. Available for sale: All the other securities are considered as available for sale and these securities are recorded at their fair value and any gain or loss is recognized unrealized gain or loss until the securities are actually sold. To Prepare: The Journal entries to record the transactions for the current year

Question

Want to see the full answer?

Answer 1

Question

Chapter 15, Problem 11QS

To determine

Concept Introduction:

Investment in Debt securities:

Debt securities are financing instrument which represents the loan taken from the lender and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits, preferred stock, corporate bonds etc. The investment in debt securities is classified under following categories:

Held to maturity: Held to maturity is a type of debt investment that the investor intends to hold until maturity. These securities are recorded at amortized cost.

Trading: Trading securities are purchased by the investor for the purpose to sell within a short-term period to each profit. These securities are recorded at their fair value and any gain or loss is recognized in the income statement for that period.

Available for sale: All the other securities are considered as available for sale and these securities are recorded at their fair value and any gain or loss is recognized unrealized gain or loss until the securities are actually sold.

To Prepare:

The Journal entries to record the transactions for the current year

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

An asset has a book value of $22,500 on December 31, Year 4. The asset has been depreciated at a straight-line rate of $5,000 per year. If the asset is sold on December 31, Year 4 for $19,000, what should the company record? • a. A loss on sale of $3,500 • b. A gain on sale of $3,500 . c. Neither a gain nor a loss is recognized . • d. A loss on sale of $1,000 e. A gain on sale of $1,000

The audited accounts of Rattle Limited for year-end December 31, 2013, show a profit of $2,400,000 after charging the following: Depreciation $380,000 Legal fees $723,000 Bad debts $67,000 Donations $55,400 Accrued interest $51,000 Foreign travel $75,000 Repair and maintenance $216,000 Premium on insurance $88,000 Other Information: a. - Legal fees of $723,000 are for expenses in respect of the recovery of debts. b. - The company made donations of $55,400 to a registered charity. c. - The bad debt expense is a percentage of debtors at year-end. d. - Foreign travel expense was for a trip by the marketing manager to meet with potential buyers. e. - The capital allowances have been calculated at $142,000 f. - The premium paid of $88,000 was on insurance for the business’ property. g. - There were acquisition expenses of $45,000 associated with the expansion of the business. What is Rattle Ltd.’s corporate tax liability?…

A company's income statement for September reports a net income of $75,000. During the same month, the company paid $15,000 in dividends. If the beginning stockholders' equity was $0, what is the ending balance in stockholders' equity?