FINANCIAL ACCOUNTING: TOOL
FINANCIAL ACCOUNTING: TOOL
9th Edition
ISBN: 9781119598305
Author: Kimmel
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter AH, Problem 3Q

(a)

To determine

Sale of debt investment:Debt investments refer to the investments made in debts by the investor for which it lends funds to the borrowing company at a predetermined interest and the debt amount is repaid on the maturity date. For example, corporate bonds, government bonds, certificate of deposits.

Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, there is a gain on sale of investments.

Loss on sale of debt investments: If the sale proceeds from sale of debt investments is less than the cost price of the debt investments, there is a loss on sale of investments.

To explain: the computation of gain or loss on sale of debt investments.

(b)

To determine

To explain: the presentation of gain or (loss) on sale of debts investments in the financial statements.

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