MGT120H5 Chapter Notes - Chapter 8: Equity Method, Current Asset, Fixed Asset
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MGT120H5 Full Course Notes
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Document Summary
Chapter #8 long-term investments and time value of money. An investment is an asset to the investor. It may be short term (current asset) or long term (fixed asset) Short term investment are also known as marketable securities. Short term must be intended to sell within one year otherwise it is long term. Ifrs classifies long term investments into three categories: Non-strategic investments when investor owns less than 20% Investments subject to significant influence investor owns of voting shares uses cost method between 20% and 50% of voting shares (profit and loss treated as income or loss) uses equity method. Investments in subsidiaries when investor owns more than. 50% and can be reported as cost or equity method. They are accounted for at fair value because they intend to sell it at current market price. Cost initial amount for recording investment. They are recorded on balance sheet at fair value. Dr long term investment cr unrealized gain.
