Professor Adams' Lecture Materials

Module 4: Investments

Module 4: Investments (bond investments)

Module 4: Investments (Bond investment journal entries)

Module 4: Accounting for investments (intro. to debt investments)

Module 4: Investments (calculating the selling price of bonds)

Module 4: Investments (calculating the selling price of bonds and creating a bond amortization table)

Outline of Module

This module deals with situations where one company makes an investment in a second company. Companies can make either debt or equity investments. We deal with the accounting issues faced by the investing company (i.e., not the company receiving the funds).

"Corporations raise funds to finance their operations by selling equity securities (common and preferred stock) and debt securities (bonds and notes)" (Spiceland et al. 2019, p. 645).

Learning objectives (with links to notes embedded)

LO4-01: Describe the key characteristics of a debt investment and demonstrate how to account for a purchase and for interest revenue.
LO4-02: Demonstrate how to identify and account for debt investments classified for reporting purposes as held-to-maturity.
LO4-03: Demonstrate how to identify and account for debt investments classified for reporting purposes as trading securities.
LO4-04: Demonstrate how to identify and account for debt investments classified for reporting purposes as available-for-sale securities.
LO4-05: Demonstrate how to identify and account for equity investments classified for reporting purposes as fair value through net income.
LO4-06: Demonstrate how to identify and account for equity investments accounted for under the equity method.
LO4-07: Explain the adjustments made in the equity method when the fair value of the net assets underlying an investment exceeds their book value at acquisition.

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