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Chapter 10: Q13RQ. (page 567)

How are held-to-maturity debt investments reported on the financial statements?

Short Answer

Expert verified

Held to maturity debt investments arereported on the asset side on the basis of their maturity period.

Step by step solution

01

Definition of Financial Statements

The statement reporting all the information related to the financial transactions that occurred during the fiscal year is known as the financial statement.

02

Held-to-Maturity Debt Investment on Financial Statement

The business entity first determines the maturity period of the debt investment and then classifies it as a current and non-current asset for reporting it on the balance sheet.

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Most popular questions from this chapter

When disposing of an available-for-sale debt investment, where is the gain or loss on disposal reported in the financial statements?

How is the purchase of a held-to-maturity debt security at face value recorded?

In 150 words or fewer, explain the difference between trading debt investments and available-for-sale debt investments.

What adjustment must be made at the end of the period for trading debt investments and available-for-sale debt investments?

Accounting for equity investments

Strategic Investments completed the following investment transactions during 2018:

Jan. 14 Purchased 800 shares of Phyflexon stock, paying \(50 per share. The investment represents 4% ownership in Phyflexon’s voting stock. Strategic does not have significant influence over Phyflexon. Strategic intends to hold the investment for the indefinite future.

Aug. 22 Received a cash dividend of \)0.24 per share on the Phyflexon stock.

Dec. 31 Adjusted the investment to its current market value of \(45 per share.

31 Phyflexon reported net income of \)330,000 for the year ended 2018.

Requirements

Prepare a partial income statement for Strategic Investments for year ended December 31, 2018.
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