教程教案講稿module

FinancialaccountingandreportingWangLeiCPA(US)activeMemberofAmericanInstituteofCertifiedPublicAccountantsModule16Investments1DebtsecuritiesAnysecurityrepresentingacreditorrelationshipwithanentity2EquitysecuritiesOwnershipinterests(common,preferred,othercapitalstock)Rightstoacquireownershipinterest(rights,warrants,calloptions)Rightstodisposeofownershipinterests(putoption)Aconceptsofaccountingandinvestmentpercentage1)investmentsoflessthan20%oftheoutstandingstock2)investmentsbetween20%and50%oftheoutstandingstock3)investmentsofmorethan50%oftheoutstandingstockSeeexhibitonpage688AconceptsofaccountingandinvestmentpercentageConsistof

debtsecurities<20%equitysecuritiesSegregatedinto1heldtomaturitysecurities(amortizedcost)2tradingsecurities(subsequentlymeasuredatFV)3Availableforsalesecurities(subsequentlymeasuredatFV)BinvestmentinwhichsignificantinfluencedoesNOTexistTradingSecuritiesDebtandequityboughtandheldprincipallyforsellingintheneartermtogenerateprofitabilityfromshorttermpricefluctuation–forspeculationpurposeGR:CurrentAssetMarketableSecuritiesAvailableforsalesecuritiesDebt&equityneithermeetthedefinitionofTradingorHeldtomaturity;dependsonintentofthemgmtGR:non-currentassetIfrepresentscashavailableforcurrentoperations,couldbereportedascurrentassetMarketableSecuritiesHeldtomaturitysecuritiesdebtonlyMgmthasthepositiveintentandabilitytoholdtomaturityforlongterm(finite)profitreturn.Theintentisholdthedebtforanindefiniteperiodoftimebutnotuntilitsmaturity,thenit’savailable-for-sale.GR:non-currentasset,butmaybecurrentifmaturitydateiswithincurrentperiod.MarketableSecuritiesTradingSecurities-@FairValue(=MarktoMarket)ChangesintheFVresultinunrealizedGains/LossesTwoGLaccountsaremaintained:onefororiginalcost,oneforvaluationOnlythenetamountispresentedonBS(cost+/-valuation)UnrealizedGain/LossisreportedontheIS(IDEA)JournalEntry:Dr.Unrealizedlossontradingsecurities$xxxCr.Valuationaccounting$xxxRealizedGain/lossarerecognizedwhensoldandhitsISValuationofMarketableSecuritiesAvailableforsaleSecurities-@FairValue(=MarktoMarket)UnrealizedGain/LossisreportedinOCI(PUFER)JournalEntry:Dr.Unrealizedlossonavailable-for-salesecurities$xxxCr.Valuationaccounting $xxxRealizedgain/lossarerecognizedwhenavailableforsalesecurityissoldorimpairedandhitsIS.ValuationofMarketableSecuritiesMarketablesecuritiesSeechartonpage690RecognizedG/L=SellingPrice–FV(originalcost+/-valuationaccountbalance)SaleofTradingSecuritiesRealizedG/L=SellingPrice–OriginalCostUnrealizedG/LinOCIarebackedoutandreclassedintoI/SuponsaleSaleofAvailable-for-SaleSecuritiesTransfershouldberareandonlyoccurifjustified.TransfershouldbeaccountedforatFV.UnrealizedG/Lshouldberecognizedasfollowed:FromTradingSecuritiestoAnyOther–unrecognizedG/LalreadyinISandnoneedtoadjust.ToTradingSecuritiesfromAnyOther–theunrealizedholdingG/Lontransferdateshallberecognizedinearningimmediately.Held-to-MaturitytoAvailable-for-Sale–unrealizedholdingG/LattransferdateshallgotoOCI.UnrealizedG/L=FV–amortizedcostAvailable-for-SaletoHeld-to-Maturity–unrealizedG/LwasinOCI.AmortizeitintoI/Sovertheremaininglifeofthesecurityasanadjustmentofyield(consistenttoamortizationofbondpremiumordiscount).Seechartonpage694TransferbetweenctegoriesEquityMethod(Significantinfluence;20%-50%)E.DifferencesbetweenthePurchasePriceandBookValue(NBV)oftheInvestee’sNetAssetsEquityMethodEquityMethod(Significantinfluence;20%-50%)E.DifferencesbetweenthePurchasPriceandBookValue(NBV)oftheInvestee’sNetAssetsMultiplechoice1-31Investorhassignificantinfluenceoverinvestee’soperatingandfinancialpoliciesSignificantInfluence:LargestShareholder,MajorityofboardUsethismethodevenifownership<20%buthassignificantinfluence(CPAexampasskey)CinvestmentwheresignificantinfluencedoesexistDiff=costofinvestment–bookvalueofnetassetsoftheinvesteePositiveFV>BVGoodwillNegativeBV>FVNegativegoodwillSeeexampleonpage696CinvestmentwheresignificantinfluencedoesexistCostadjustedforfairvaluemethodNopanytransactionsoramortizationsarerecognizedPartialequityRecognitionof%shareofeorloss,dividends,andanychangesininvestment%FullequityInadditiontoabove,includeanynecessaryamortizationorwriteoffofthediffbetweentheinvestmentcostandbookvalueoftheinvestmentCinvestmentwheresignificantinfluencedoesexistEquityMethod(Significantinfluence;20%-50%)Seeexampleonpage697CinvestmentwheresignificantinfluencedoesexistChangetoorfromequitymethoda)FromcosttoequitymethodInvestmentmustbeadjustedretroactivelyPrioryear’seandretainedearningsmustberetroactivelyrestated.b)fromequitytocostbecauseofinabilitytoinfluencetheinvestee’sfinancialandoperatingpoliciesNOretroactiverestatementisallowedCinvestmentwheresignificantinfluencedoesexistMultiplechoice32-48Reviewpage654DividendsreceiveddeductionDequitymethodanddeferredetaxesAnentitymayelecttovalueitssecuritiesatFVIfelectFVforreportingavailableforsaleorheldtomaturitysecurities,thesecurityisrevaluedtoFVandgainorlossisrecordedinearningsfortheperiodEthefairvalueoptionFstockdividendsandsplitsNOTrecordedaseGstockrightsRatio=marketvalueofright/(marketvalueofright+marketvalueofstock)Seeentriesonpage700Seeexampleonpage701HCashsurrendervalueoflifeinsuranceNoncurrentinvestmentwhenthecompanyisthebeneficiaryMultiplechoice53-59Module17StatementofcashflowPrimarypurposeProvideinformationaboutanentity’scashreceiptsandcashpaymentsDiscloseinformationaboutthefinancingandinvestingactivitiesofanentityHelpusersofthestatementassess:a.entityabilitytogeneratepositivefutureCFb.entityabilitytomeetitsobligationsandpaydividend.c.thereasonsfordiffbetweeneandassociatedcashreceiptsandpaymentsandd.thecashandnoncashaspectsofanentity’sinvestingandfinancingtransactionsAobjectivesofthestatementofcashflowOperatingactivitiesIncludealltransactionsthatareNOTinvestingandfinancingactivitiesInvestingactivitiesIncludethelendingofmoneyandcollectiononloansFinancingactivitiesIncludeobtainresourcesfromcreditorsandrepayingtheamountborrowed.Seeexamplesofclassificationsoftransactionsonpage706BstatementofcashflowsclassificationMultiplechoice1-15Preferablemethod-directmethodAlsopermitted-indirect(reconciliation)methodDirectmethodFormulasforconversionfromaccrualbasistocashbasisSeepage708formulasandexampleofpresentationOrT-accountanalysismethodmaybeusedinsteadofformulasCdirectorindirectpresentinreportingoperatingactivitiesGeneralRuleAsset&Cash:inverserelationshipAssetincreasespurchasecashoutflowAssetdecreasessellcashinflowLiability/Equity&Cash:directrelationshipLiabilityorEquityincreasesBorrowingcashinflowLiabilityorEqui