MGMT 131B Chapter Notes - Chapter 17: Retained Earnings, Income Statement
Document Summary
Principal + premium/discount all go to debt investment . Debt investments: fair value, but keep track of amortized cost. Fair value = debt investment +/- fair value adjustment : unrealized holding gain or loss from fv change goes to equity (other comprehensive. Cr: unrealized holding gain or loss equity: how to determine the amount of fv adjustment, at portfolio level, fv adjustment this year = what the fv adjustment balance should be this year- Previous balance of fv adjustment: gain from sale of investment = selling price amortized costs. Equity investments (only for < 20% holding : fair value, but keep track of initial purchase cost. Fair value = equity investment +/- fair value adjustment : gain from sale of investment = selling price initial purchase cost. Debt investments: fair value, but still keep track of amortized cost. Fair value = debt investment +/- fair value adjustment : unrealized holding gain or loss from fv change goes to net income.
