Many organizations have an excess amount of cash for that they do not have an immediate need, so they invest it in a variety of debt and equity securities, or other forms of investment. How are they supposed to account for these investments and how should the investment process be managed? In Accounting for Investments, we define the types of investment classifications, how the accounting varies for each one, and how to deal with a number of investment transactions, including purchases, impairments, changes in value, and sales. The course also addresses the situations in which the equity method must be used, and demonstrates how the method functions. Further, the course covers investments from a control perspective, with an entire chapter describing a number of investment controls, as well as an investment procedure and several investment policies. In addition to the general discussion of investment accounting, there is a more specific examination of the accounting for investments in a nonprofit environment.
Upon successful completion of this course, participants will be able to:
- Identify the characteristics of the various types of investments and the rules under which the investment classifications can be used.
- Identify activities that will trigger the recognition of unrealized gains and losses.
- Identify the rules and subsequent disclosures regarding the determination of other-than-temporary impairment.
- Identify the impact of various investee actions on an investor's equity method recordation of its investment in the investee.
- Cite the rules under which a nonprofit can record a purchased investment.
- Cite the systems and policies used to govern the administration of investments.
- Identify the dangers posed by measuring certain investment outcomes.
Table of Contents
Chapter 1 – Accounting for Investments
Types of Investments
Types of Bonds
Types of Stock
Certificates of Deposit
Money Market Funds
U.S. Government Debt Instruments
State and Local Government Debt
The Realized and Unrealized Gain or Loss
Other Comprehensive Income
Purchase and Sale of Investments
The Gain or Loss Calculation
Noncash Acquisition of Securities
Assignment of Costs to Securities
Conversion of Securities
Sale of Securities
Accounting for Dividends and Interest Income
Stock Dividends and Stock Splits
Ongoing Accounting for Investments
Impact of Influence on Accounting Method
The Fair Value Option
The Effective Interest Method
Impairment of Investments
Presentation of Investments in the Financial Statements
General Investment Disclosures
Chapter 1 – Review Questions
Chapter 2 – The Equity Method
The Equity Method
Partnerships, Joint Ventures, and Limited Liability Entities
Chapter 2 – Review Questions
Chapter 3 – Nonprofit Investment Accounting
Subsequent Measurement of Investments
Gains and Losses on Investment
The Equity Method of Accounting
Nonprofit Investment Policies
Chapter 3 – Review Questions
Chapter 4 – Investment Controls and Procedures
The Investment Control Environment
The Investment Quote Sheet
Funds Investment Procedure
Earnings on Invested Funds
Chapter 4 – Review Questions
Review Question Answers and Rationales
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