FUNDAMENTAL ACCOUNTING PRINCIPLES
24th Edition
ISBN: 9781260811704
Author: Wild
Publisher: MCG
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Chapter F, Problem 16QS
To determine
Concept Introduction:
Investment in Debt securities:
Debt securities are financing instrument which represents the loan taken from lender and usually these securities pay defined interest rate on the amount borrowed. The several types of debt instruments are bonds, certificate of deposits,
- Held to maturity: Held to maturity is a type of debt investment that the investor intends to hold till 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 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.
The amount of unrealized gain or loss to be reported in the income statement
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