Investment in securities: An investment in the security of another company can and influencing investment or non influencing on the basis of type of investment made. An influencing investment in securities provides the controlling or influencing power to the investor in the company. Influencing investments can be classified into two major types as follows: Controlling interest : In this case the investor holds more than 50% equity of the company and it has control over the management of the company. The accounts of the company are required to be consolidated in such cases. Significant influence: In this case the investor holds more than 20% but less than 50% equity of the company and it has significant influence over the management of the company. The investor follows the equity method to account such type of investments. Non influencing investments can be classified into three major types as follows: Held to maturity: Held to maturity is a type of investment that the investor intends to hold till maturity. These securities are recorded at 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 in 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 identify: Three classes of non influential and two classes of influential investment in securities

Question

Want to see the full answer?

Answer 1

Question

Chapter 15, Problem 4DQ

To determine

Introduction:

Investment in securities: An investment in the security of another company can and influencing investment or non influencing on the basis of type of investment made. An influencing investment in securities provides the controlling or influencing power to the investor in the company.

Influencing investments can be classified into two major types as follows:

Controlling interest: In this case the investor holds more than 50% equity of the company and it has control over the management of the company. The accounts of the company are required to be consolidated in such cases.

Significant influence: In this case the investor holds more than 20% but less than 50% equity of the company and it has significant influence over the management of the company. The investor follows the equity method to account such type of investments.

Non influencing investments can be classified into three major types as follows:

Held to maturity: Held to maturity is a type of investment that the investor intends to hold till maturity. These securities are recorded at 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 in 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 identify: Three classes of non influential and two classes of influential investment in securities

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Standard Quantity Puvo, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: Standard Price or Rate Standard Cost Direct materials 5.90 pounds $0.70 per pound $4.13 Direct labor 0.50 hours $34.50 per hour $ 17.25 Variable manufacturing 0.50 hours $8.60 per hour $ 4.30 overhead During March, the following activity was recorded by the company: -The company produced 2,500 units during the month. -A total of 19,500 pounds of material were purchased at a cost of $13,680. -There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,720 pounds of material remained in the warehouse. -During March, 1,100 direct labor-hours were worked at a rate of $31.50 per hour. -Variable manufacturing overhead costs during March totaled $14,161. -The direct materials purchases…

account

Information for Southgate Company's direct labor costs for the month of March 2021 was as follows: Actual direct labor hours: 42,000 hours Standard direct labor hours: 40,000 hours Total direct labor payroll: $315,000 Direct labor efficiency variance: unfavorable $5,000 What is Southgate's direct labor price (or rate) variance?