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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Briefly summarize the accounting for an investment in available-for-sale securities.

To determine

Explain accounting for an investment in available-for-sale securities.

Explanation

Investment: It refers to the process of using the currently held excess cash to earn profitable returns in future. The investments can be made in equity securities such as shares or debt securities such as bonds.

Available for sale securities: these are the securities which are not intended to be sold in the near future and there is no intension to hold the securities till their maturity.

Accounting for an investment in available-for-sale securities:

  • Investment in available-for-sale securities are primarily recorded at its cost.
  • On the balance sheet the investment in available-for-sale securities are reported at fair value...

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