Which types of investments are valued at amortized cost? Explain the rationale for this accounting.

Q: Define risk-adjusted cost of capital (r)

A: Risk adjusted cost of capital is the measure of returns of a project relative to the risks of a…

Q: What are the absolute measures of investment worth?

A: There are various approaches that can be utilized to decide a value or worth for the venture. Net…

Q: What is the calculation for return on assets (ROA)? Explain what ROA measures?

A: ROA is the abbreviation used for Return on Assets. It a common accounting term and this is usually…

Q: What are the different risks associated in the accounting of investments?

A: Answer: There is always risk while auditing and accounting.

Q: Why are fixed assets carried on the balance sheet at a price that may notreflect the true value of…

A: Fixed assets: Fixed assets are assets held on a long period basis more than one year and…

Q: Discuss the accounting problems associated with interest capitalization.

A: Interest capitalization: Capitalization interest is the cost of funds that are used to finance for…

Q: If Valuation Allowance for Available-for-Sale Investments has a credit balance, how is it treated on…

A: Available-for-sales securities: These are short-term or long-term investments in debt and equity…

Q: What are the Return on Total Assets?

A: Return on total assets: Return on total assets (ROTA) is a ratio that calculates a corporation's…

Q: ing the investment is appropriately recognized as financial assets at amortized cost: Determine the…

A: Initial investment is the amount required to start a business or a project. It is also called…

Q: Define Interest Capitalization.

A: Interest Expense: The cost of debt which is incurred during a particular accounting period is called…

Q: In computing the cost of capital, do we use the historical costs of existing debt and equity or the…

A: WACC is cost incurred by entity to finance its capital structure. It is sum of weighted individual…

Q: Where can authoritative IFRS be found related to investments?

A: International Financial Reporting Standards (IFRS):   International Financial Reporting Standards is…

Q: What is a capitalization rate? What are the different ways of arriving at this rate for an…

A: Capitalization rate: Capitalization rate is the projected rate of return percentage that a property…

Q: In general terms, what is the Capital AssetPricing Model (CAPM)? What assumptions weremade when it…

A: CAPM: The capital asset pricing model (CAPM) is a method utilized to determine a hypothetically…

Q: Differentiate between a capital investment and an expense investment

A: Investment refers to the allocation of the funds in the assets in order to get returns. The…

Q: Who are the providers (savers) and users (borrowers) of capital?

A: The providers are known as savers and the users are known ad borrowers of capital are given below…

Q: Capitalizing a cost involves increasing what type of account?a. Liabilityb. Expensec. Stockholders’…

A: An asset is something which contains future economic value or future benefit.  A liability is…

Q: What is meant by asset transformation and how is it the basis for differentiating between indirect…

A: Finance transformation can be defined as a business-wide combination of process, system, and culture…

Q: What are the advantages of matching the maturities of assets and liabilities? What are the…

A: Matching the maturities of assets and liabilities refers to matching the similar category of assets…

Q: What does the rate of return on total assets measure, and how is it calculated?

A:

Q: What are investment assets ?

A: Investment Assets: Investment assets are termed as tangible or intangible things that are acquired…

Q: Should short-term

A: The cost of capital is the rate of return that is expected by the firm to earn from its investment…

Q: Why is profit shown on liabilities side?

A: This is because of separate entity principle of accounting which says that the owner and business…

Q: e amortized cost for a financial asset

A: Amortized cost is the amount at which financial assets are reported on Balance Sheet.

Q: What is net operating working capital? Why does it exclude mostshort-term investments and notes…

A: Introduction: Working capital is the capital of company that is used in its day-to-day operational…

Q: What makes current liabilities different from long term liabilities?

A: Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Describe the Principle of Investing in Financial Assets?

A: The financial assets are those assets which are not having a physical existence like stocks, fixed…

Q: Which one of the following methods of analysis is most appropriate to use when two investments are…

A: Capital budgeting techniques such as internal rate of return, net present value method, average…

Q: Borrowing cost can be capitalized as cost of the assets when

A: Borrowing costs are costs related to amount borrowed or loans taken. This is the interest expense…

Q: Discuss, using practical why capital ratio is used to share a loss on realization

A: The ratio is used because the partners having more capital is liable for more loss and the partner…

Q: How to calculate the Amortization Expense?

A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…

Q: Why does the interest in the original investment or the capital cost is included as a cost in the…

A: The annual worth method is the method in which all the cash flows are equally distributed across the…

Q: Describe the principles of asset valuation. Distinguish between the required rate of return and…

A: Asset Valuation means that a company or business is studied to understand what will be the intrinsic…

Q: Briefly explain the meaning of working capital and working capital management. Also explain the…

A: Explaination: Working capital is an essential term that measures the amount of operational cash…

Q: Why isn’t accounting net income used in the net present value method of making capitalbudgeting…

A:

Q: What are Quoted Investments ?

A: Quoted investment: It is an accounting term for investment in share or debenture, which is quoted on…

Q: These investments are initially recorded at purchase price plus transaction costs

A: These investments are initially recorded at purchase price plus transaction costs Answer - Financial…

Q: Describe the accrual accounting rate-of-return method. What are its main strengths and weaknesses?

A:

Q: How would a debit balance in Unrealized Gain (Loss) on Available-for-Sale Investments be reported in…

A: Available-for-sale securities: These are short-term or long-term investments in debt and equity…

Q: Explain the meaning of the terms working capital and working capital management in a succinct…

A: Every business requires a sufficient amount of capital and working capital to ensure that the day to…