MGT120H5 Chapter Notes - Chapter 5: Market Liquidity, Book Value, Accounts Receivable

• School: UTM
• Department: Management
• Course: MGT120H5
• Professor: Catherine Seguin

Document Summary

Short term investments are the next most liquid current assets after cash. Short-term investments (marketable securities) investment that a company plans to hold for one year or less. We record them right under cash on the balance sheet. Held-for-trade investment a share or bond investment that is to be sold in the near future with the intent of generating profits on the sale. Held-for-trade investments are recorded at their fair value. Fair value amount a willing buyer would pay a willing seller to acquire an asset. It is an unrealized gain/loss because it has not yet been sold. Adjustment for an unrealized gain would be dr short-term investment and cr unrealized gain on investments. A realized gain/loss occurs when the investor sells the investment. Realized gain sale price greater than investment carrying amount. Realized loss sale price is less than investment carrying amount. There should be notes on the financial statements disclosing details about investments.