ACCT 342 Chapter 12 Book Notes

Unrealized holding gains and losses for trading securities are included in _____ _______ in the period in which _______ ________ changes.

-Net Income -Fair Value

The equity method is used when..

An investor can't control but can influence the investee.

Realized gain or loss is difference between

Carrying value and the cash received from selling an equity investment is included in net income.

All equity investments are recorded initially at

Cost

All investment securities are initially recorded at:

Cost

Trading securities are adjusted to their ______ _______ in each reporting period.

Fair Value

Trading securities are reported at _______ _______ in the balance sheet.

Fair Value

AFS Investment are reported at their

Fair Values

Dividends received for equity investments are included in

Income

What does a bond purchased at a discount do to the outstanding balance?

Increases it the outstanding balance of the investment.

Consolidated financial statements combine

Individual elements of the parent and subsidiary statements.

Cash flows from buying and selling AFS securities are classified as...

Investing Activities

Cash flows from buying and selling HTM securities are classified as

Investing activities

Under the effective interest method, interest for a period equals the

Market rate of interest when the debt was purchased multiplied by the outstanding balance of the debt at the beginning of the period.

AOCI includes...

NET unrealized holding gains or losses accumulated over the current and prior periods.

Cash flows from buying and selling trading securities are classified as...

Operating Activities

The fair value of a fixed-rate investment moves in the

Opposite direction of market interest rates.

What is the purpose of trading securities?

Profiting from short-term price changes

On _____ ______ and _________ are reported in net income.

Realized gains and losses

When an AFS Investment is sold....

Realized gains and losses are included in net income.

When an equity method investment is sold, a gain or loss is recognized for...

The difference between its selling price an its carrying amount.

Changes in fair value gives rise to...

Unrealized holding gains and losses

OCI includes...

Unrealized holding gains and losses that occur during the reporting period.

Held to Maturity investments are reported at

amortized cost in the balance sheet.