ACTG 3110 Lecture 2: ACTG 3110 POSTMIDTERM

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Chapter eleven: financial instruments investment in debt and equity securities. Investment objects reasons for investments: investment of idle cash, active investment portfolio companies may own securities as part of their normal course of business, long-term investments to generate earnings, strategic alliances, legal frameworks. Passive investment (<20%) temporary use of idle cash. Significant influence (20 50%) bought the shares with the purpose to impact the business, and want an influence over the bod. Control (50%+) want control over the bod. * need to consider de facto; substance over form. Initial recognition: recognize at fair value, transaction costs are expensed if classification is fvtpl or subsidiary. Included in oci; part of shareholder"s equity as a separate reserve. Investment account replaced with financial statements elements of investee for reporting. Share of investee adjusted for fv depreciation and unrealized intercompany profits. Investment revenue represented through inclusion of investee revenue and. Include in earnings" only the annual change in value in the year of sale.

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