Debt securities: Debt security is a financial instrument which is issued by the organization and is sold to the investors. Bonds, commercial papers, debentures and government securities are known as debt securities.
Trading securities: Debt securities which are held with the intention to sell in the short term for profit are trading securities.
Unrealized holding gains and losses: An unrealized gain is a profit recorded on paper results from the investment. It occurs when shares prices increase after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of increase in share price is recorded as an unrealized gain.
An unrealized loss is a loss recorded on paper results from the investment. It occurs when shares prices decrease after investor purchases it, but an individual has to sell it, till the time it is not sold the amount of decrease in share price is recorded as an unrealized loss.
Available-for-sale securities: A debt or equity securities which are purchased with the intention of selling it before its maturity, or selling prior to the longest time period in case if security is without its maturity are known as available-for-sale securities.
Fair value: Fair value is a selling price which is agreed by the buyer and seller, and is also the estimate of the potential market price of good, service or asset.
GAAP: GAAP is “Generally Accepted Accounting Principles.” It is standard guidelines which are commonly used for financial reporting. These guidelines are maintained by the AICPA (American Institute of Certified Public Accountants).
Derivatives: Derivative is a product whose value is derived from underlying assets called base. Basically it is a contract between the two or more parties based on assets.
Interest rate swap contract: It is an agreement between the two parties who are in contract, where one party chooses to pay a variable rate or a fixed rate agreed in advance for a predetermined period of time. Vice-verse same is applicable for the other party in the contract.
Hedge: Hedge is an investment to reduce the risk arising out of the changes in the price movements of the assets.
Fair value hedge: Fair value hedge eliminates the risk of changes in fair value of assets or a liability already recognized or an unrecognized firm’s commitment which could affect the gain or loss.
(a) To determine: To determine the investments P Company reported in 2014 and the accounting for its investments in financial statements.
Given Information: All the information related to P Company is provided in the question document.
(b) To determine: To determine the valuation and fair value of P’s investments.
Given Information: All the information related to P Company is provided in the question document.
(c) To determine: To determine the use of derivative financial instruments by P Company.
Given Information: All the information related to P Company is provided in the question document.
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Chapter 17 Solutions
Intermediate Accounting
- What was the dollar amount of under allocated or overallocated manufacturing overhead ?arrow_forward5 POINTSarrow_forwardFalse Value Hardware began 2013 with a credit balance of $31,900 in the allowance for sales returns account. Sales and cash collections from customers during the year were $680,000 and $640,000, respectively. False Value estimates that 5% of all sales will be returned. During 2013, customers returned merchandise for credit of $23,000 to their accounts. False Value's 2013 income statement would report net sales of: a. $657,000. b. $646,000. c. $648,100. d. $671,100.arrow_forward
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