Accounting for Investments, Volume 2: Fixed Income Securities and Interest Rate Derivatives—A Practitioner's Guide

LEARNING OBJECTIVES

After studying this chapter you will be able to get a grasp of the following:

• Meaning of fixed income securities classified as “held-to-maturity”
• Accounting for held-to-maturity securities in the light of relevant accounting standards
• Classification of investments from intention and other perspectives
• Effective interest and amortized cost measurement concepts
• Trade life cycle of fixed incomesecurity investments classified as “held-to-maturity”
• Accounting journal entries to be recorded during the different phases of the trade life cycle
• Illustration of accounting for investments in fixed income securities classified as “held-to-maturity”
• Preparation of general ledger accounts
• Preparation of income statement, balance sheet after the bond investments are made
• Disclosure requirements for investments in fixed income securities
• FX revaluation and FX translation process
• Functional currency, foreign currency and presentation currency
• Distinction between capital gains and currency gains in unrealized gains