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Lecture Financial accounting (9th Edition): Chapter 12 - Weygandt, Kieso, Kimmel

Chapter 12 – Investments. The following will be discussed in this chapter: Explain how to account for debt investments, explain how to account for stock investments, discuss how debt and stock investments are reported in financial statements. | Preview of Chapter 1 Financial Accounting Ninth Edition Weygandt Kimmel Kieso Preview of Chapter 12 Financial Accounting Ninth Edition Weygandt Kimmel Kieso Learning Objectives After studying this chapter, you should be able to: [1] Discuss why corporations invest in debt and stock securities. [2] Explain the accounting for debt investments. [3] Explain the accounting for stock investments. [4] Describe the use of consolidated financial statements. [5] Indicate how debt and stock investments are reported in financial statements. [6] Distinguish between short-term and long-term investments. 12 Investments Corporations purchase investments in debt or stock securities generally for one of three reasons. Corporation may have excess cash. Generate earnings from investment income. For strategic reasons. Why Corporations Invest Illustration 12-1 Temporary investments and the operating cycle LO 1 Pension funds and banks regularly invest in debt and stock securities to: house excess cash until needed. generate earnings. meet strategic goals. avoid a takeover by disgruntled investors. Question Why Corporations Invest LO 1 Learning Objectives After studying this chapter, you should be able to: [1] Discuss why corporations invest in debt and stock securities. [2] Explain the accounting for debt investments. [3] Explain the accounting for stock investments. [4] Describe the use of consolidated financial statements. [5] Indicate how debt and stock investments are reported in financial statements. [6] Distinguish between short-term and long-term investments. 12 Investments Recording Acquisition of Bonds Cost includes all expenditures necessary to acquire these investments, such as the price paid plus brokerage fees (commissions), if any. Accounting for Debt Investments LO 2 Investments in government and corporation bonds. Entries are made to record the acquisition, the interest revenue, and the sale. Recording Bond Interest Calculate and record interest revenue based upon the . | Preview of Chapter 1 Financial Accounting Ninth Edition Weygandt Kimmel Kieso Preview of Chapter 12 Financial Accounting Ninth Edition Weygandt Kimmel Kieso Learning Objectives After studying this chapter, you should be able to: [1] Discuss why corporations invest in debt and stock securities. [2] Explain the accounting for debt investments. [3] Explain the accounting for stock investments. [4] Describe the use of consolidated financial statements. [5] Indicate how debt and stock investments are reported in financial statements. [6] Distinguish between short-term and long-term investments. 12 Investments Corporations purchase investments in debt or stock securities generally for one of three reasons. Corporation may have excess cash. Generate earnings from investment income. For strategic reasons. Why Corporations Invest Illustration 12-1 Temporary investments and the operating cycle LO 1 Pension funds and banks regularly invest in debt and stock securities to: house excess cash until