Investments can be accounted for in a variety of ways depending upon the nature of the investment instrument. We will begin this chapter by looking at the accounting for bonds, or debt securities. Once we’ve completed our discussion of debt securities we will move on to the accounting for equity securities. | Investments 12 Chapter 12: Investments Accounting for Investment Securities Bonds and notes (Debt securities) Common and preferred stock (Equity securities) Investments can be accounted for in a variety of ways, depending on the nature of the investment relationship. Investments can be accounted for in a variety of ways depending upon the nature of the investment instrument. We will begin this chapter by looking at the accounting for bonds, or debt securities. Once we’ve completed our discussion of debt securities we will move on to the accounting for equity securities. Reporting Categories for Investments Investments in securities, that do not represent a significant ownership interest, are placed in one of three categories. Debt securities may be classified as held to maturity, available for sale or trading securities. Equity securities, may only be classified as available for sale or trading securities. Debt securities that are classified as held to maturity are reported on the . | Investments 12 Chapter 12: Investments Accounting for Investment Securities Bonds and notes (Debt securities) Common and preferred stock (Equity securities) Investments can be accounted for in a variety of ways, depending on the nature of the investment relationship. Investments can be accounted for in a variety of ways depending upon the nature of the investment instrument. We will begin this chapter by looking at the accounting for bonds, or debt securities. Once we’ve completed our discussion of debt securities we will move on to the accounting for equity securities. Reporting Categories for Investments Investments in securities, that do not represent a significant ownership interest, are placed in one of three categories. Debt securities may be classified as held to maturity, available for sale or trading securities. Equity securities, may only be classified as available for sale or trading securities. Debt securities that are classified as held to maturity are reported on the balance sheet at amortized cost. Debt or equity securities classified as available for sale are shown on the balance sheet at fair value, any unrealized gain or loss associated with the securities is reported in stockholders’ equity. Debt or equity securities classified as trading securities are shown on the balance sheet at fair value, and any unrealized holding gains or losses are reported in current period income. Learning Objectives Demonstrate how to identify and account for investments classified for reporting purposes as held to maturity. LO1 Our first learning objective in Chapter 12 is to demonstrate how to identify and account for investments classified for reporting purposes as held to maturity. Trading securities (TS) are bought and held primarily to be sold in the near term. Securities available for sale (SAS) are expected to be held for an unspecified period of time. Reporting Categories for Investments Held-to-maturity (HTM) securities are investments in debt the investor .
