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Trading securities: Debt securities which are held with the intention to sell in the short term for profit are called trading securities.
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 available-for-sale securities.
Fair value: Fair value is a selling price which is agreed by the buyer and seller, it is also the estimate of the potential market price of good, service or asset.
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.
(1)
Accounting:
(a)
To determine the classification and accounting for each of investment presented in the question document.
Given information: All the information related to I Company is provided in the question document.
(b)
(b)
To prepare: The
Given information: All the information related to I Company is provided in the question document.
(2)
(2)
Analysis:
The effect on I Company’s 2017 net income (as reported on I’s income statement) of I Company’s investments in other companies.
Given information: All the information related to I Company is provided in the question document.
(3)
(3)
Principles:
The different rationales for the different accounting and reporting rules are different for different types of investments in the securities of other companies.
Given information: All the information related to I Company is provided in the question document.
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Chapter 17 Solutions
Intermediate Accounting, Binder Ready Version
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