1. To determine Available-for-sale debt investments: Available-for-sale debt investments are the investments in debt securities, which are neither referred as trading debt investments nor referred to as held-to-maturity debt investments. The investors do not wish to hold them till maturity, and hence reported either as current assets or as long-term assets in the balance sheet depending upon the holding period of the security. To Journalize: The investment transactions of P investment. Explanation The journal entries of P’s investment are as follows: Purchase of investment in stock: Date Accounts and Explanation Debit ($) Credit ($) June 5, 2018 Available-for-sale debt investments (A+) 400,000 Cash (A–) 400,000 (Purchased investment in bond) Table (1) The accounting equation is also need to be followed while passing the journal entry . { Assets ( A ) Investments ( + ) Cash ( − ) } = { Liabilities ( L ) + Equities ( E ) } Available-for-sale debt investments are the assets, and they are increased. Hence, debit them. Cash is an asset account, and it is decreased. Hence, credit it. Hence, the accounting equation is balanced, by increase in one asset with the corresponding decrease in the other asset. For the receipt of interest payment as on June 30, 2018: Date Accounts and Explanation Debit ($) Credit ($) June 30, 2018 Cash (A+) (1) 8,000 Interest revenue (E+) 8,000 (Received cash interest) Table (2) Working note: { Semi-annual interest payment received } = { Face value × Annual interest rate × 6/12 } =$400,000 × 4 % × 6/12 =$8,000 (1) For the receipt of interest payment as on December 31, 2018: 2. To determine To prepare: A partial balance sheet for P’s investments in Company V as of December 31, 2018. 3. To determine To prepare: A comprehensive income statement for P’s investments assuming the net income as $ 200,000 for the year ended December 31, 2018.

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 10, Problem 10.11E

To determine

Available-for-sale debt investments:

Available-for-sale debt investments are the investments in debt securities, which are neither referred as trading debt investments nor referred to as held-to-maturity debt investments. The investors do not wish to hold them till maturity, and hence reported either as current assets or as long-term assets in the balance sheet depending upon the holding period of the security.

To Journalize: The investment transactions of P investment.

To determine

To prepare: A partial balance sheet for P’s investments in Company V as of December 31, 2018.

To determine

To prepare: A comprehensive income statement for P’s investments assuming the net income as $ 200,000 for the year ended December 31, 2018.

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Chapter 10 Solutions

Horngren's Financial & Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (6th Edition)

Ch. 10 - Prob. 1QC Ch. 10 - Which of the following investments is most likely...Ch. 10 - 3. If Intervale Railway invests $100,000 in 5%...Ch. 10 - Prob. 4QC Ch. 10 - Prob. 5QC Ch. 10 - Prob. 6QC Ch. 10 - Prob. 7QC Ch. 10 - Harvard Co. purchased a trading investment on...Ch. 10 - Prob. 9QC Ch. 10 - Prob. 10QC

Ch. 10 - What is a debt security?Ch. 10 - Prob. 2RQ Ch. 10 - Prob. 3RQ Ch. 10 - Briefly describe the five specific types of debt...Ch. 10 - How is the purchase of a held-to-maturity debt...Ch. 10 - Prob. 6RQ Ch. 10 - What method is used for investments in equity...Ch. 10 - What method is used for investments in equity...Ch. 10 - Prob. 9RQ Ch. 10 - Prob. 10RQ Ch. 10 - Prob. 11RQ Ch. 10 - Prob. 12RQ Ch. 10 - Prob. 13RQ Ch. 10 - What does the rate of return on total assets...Ch. 10 - Identifying why companies invest and classifying...Ch. 10 - Prob. 10.2SE Ch. 10 - Prob. 10.3SE Ch. 10 - Prob. 10.4SE Ch. 10 - Prob. 10.5SE Ch. 10 - Prob. 10.6SE Ch. 10 - Prob. 10.7SE Ch. 10 - Prob. 10.8E Ch. 10 - Prob. 10.9E Ch. 10 - Prob. 10.10E Ch. 10 - E10-11 Accounting for debt investments Peyton...Ch. 10 - Prob. 10.12E Ch. 10 - Prob. 10.13E Ch. 10 - Prob. 10.14E Ch. 10 - Prob. 10.15E Ch. 10 - E10-16 Classifying and accounting for equity...Ch. 10 - Prob. 10.17E Ch. 10 - Prob. 10.18AP Ch. 10 - Prob. 10.19AP Ch. 10 - Prob. 10.20AP Ch. 10 - Prob. 10.21BP Ch. 10 - Prob. 10.22BP Ch. 10 - Prob. 10.23BP Ch. 10 - Prob. 25CP Ch. 10 - Prob. 10.1EI Ch. 10 - Wild Adventure conducts tours of wildlife reserves...Ch. 10 - > Financial Statement Case 10-1 Details about a...Ch. 10 - > Communication Activity 10-1 In 150 words or...

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