Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.
Debt investments: The financial instruments which are bought by investors, or corporations, or mutual funds, are referred to as debt securities. The investments in debt securities are referred to as debt investments.
International Financial Reporting Standards (IFRS): IFRS are a set of international accounting standards which are framed, approved, and published by International Accounting Standards Board (IASB) for the preparation and disclosure of international financial reports.
To mention: The categories for debt investments, and equity investments, in which the investor lacks significant influence, according to IFRS Number: 9
Trending nowThis is a popular solution!
Chapter 12 Solutions
INT. ACCOUNTING<CUSTOM>W/CONNECT 2-YEA
- When do companies recognize gains and losses from the extinguishment of debt? Where are the gains and losses disclosed on the income statement?arrow_forwardAll investments in debt securities and investments in equity securities for which the investor lacks significant influence over the operation and financial policies of the investee are classified for reporting purposes in one of three categories, and can be accounted for differently depending on the classification. What are these three categories?arrow_forwardWhich of the following is false? A. Under PFRS 9, the basis of carrying investments in debt securities as FVPL, FVOCI, or at amortized cost, is the entity’s business model. B. Under PFRS 9, an investment in equity securities not held for trading is automatically accounted for as FVOCI. C. Reclassification of investment in equity securities under PFRS 9 is not allowed. D. Under PFRS 9, reclassification of investment in debt securities is allowed. Or none of the choices?arrow_forward
- which reporting categories are used to account for equity investments when the investor lacks the ability to significantly influence the operations of the investee?arrow_forwardWhich of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? Group of answer choices A. An entity may make an irrevocable election to classify investment in a debt instrument that is not ‘held for trading’ as such. B. All of these. C. This classification is not allowed for investment in debt instruments. D. In order to be classified as such, a debt instrument needs to both have simple principal and interest cash flows and be held in a business model in which both holding and selling financial assets are integral to meeting management’s objectives.arrow_forwardWhich statement is not true? Equity investment and trading debt investment have the same accounting about how to report their unrealized gain/loss and how to report them on the balance sheet. Only debt securities, not equity securities, can be classified as held-to-maturity, available-for-sale or trading. Change in fair value of available-for-sale and held-to-maturity debt investments have no impact on net income. Cash flows relating to held-to-maturity investments and trading investments involve both investing and operating activities.arrow_forward
- All investments in debt securities are classified for reporting purposes in one of three categories, and can be accounted for differently depending on the classification. What are these three categories?arrow_forwardWhich of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? a. This classification is not allowed for investment in debt instruments. b. An entity may make an irrevocable election to classify investment in a debt instrument that is not ‘held for trading’ as such. c. In order to be classified as such, a debt instrument needs to both have simple principal and interest cash flows and be held in a business model in which both holding and selling financial assets are integral to meeting management’s objectives. d. All of the above.arrow_forwardDemonstrate how to identify and account for debt investments classified forreporting purposes as trading securitiesarrow_forward
- The use of fair value to account for debt investments allows for more relevance of accounting figures because they would reflect the latest market assessment and opinion regarding these instruments. a. Do you agree with this statement? Explain why.arrow_forwardIndicate how unrealized holding gains and losses shouldbe reported for debt investments classified as trading,available-for-sale, and held-to-maturity.arrow_forwardWhich of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? This classification is not allowed for investment in debt instruments. In order to be classified as such, a debt instrument needs to both have simple principal and interest cash flows and be held in a business model in which both holding and selling financial assets are integral to meeting management's objectives. An entity may make an irrevocable election to classify investment in a debt instrument that is not held for trading as such. All of these.arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning