Wiley CPAexcel Exam Review 2014 Study Guide, Financial Accounting and Reporting

Module 16: Investments

Overview

Investments in debt and equity securities are accounted for using ASC Topics 320, 323, 325, and 825 (SFAS 115, APB 18, or SFAS 159). The accounting treatment for investments is different depending upon the percentage of ownership, the classification of the security, and the election of the fair value option for reporting financial assets. This module will begin by covering the rules for trading, available-for-sale, and held-to-maturity securities. The coverage includes discussions on the initial recording of the securities, subsequent accounting, transfers between categories, and financial statement presentation.

This module also covers the equity method of accounting for investments where significant influence exists. After you understand the reporting rules for investments the fair value option will be discussed.

A. Concepts of Accounting and Investment Percentage

B. Investments in Which Significant Influence Does Not Exist

C. Investments Where Significant Influence Does Exist

D. Equity Method and Deferred Income Taxes

E. The Fair Value Option

F. Stock Dividends and Splits

G. Stock Rights

H. Cash Surrender Value of Life Insurance

I. Research Component—Accounting Standards Codification

J. International Financial Reporting Standards (IFRS)

Key Terms

Multiple-Choice Questions

Multiple-Choice Answers and Explanations

Simulations

Simulation Solutions

A. Concepts of Accounting and Investment Percentage

1. Debt securities are “any security representing ...