Question

If equity investments are held as current assets, how can they be measured?

If equity investments are held as current assets, how can they be measured?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

If equity investments are held as current assets they are treated as trading securities. Trading securities are securities which are held for less than a year and hence they are classified as current assets in Balance sheet. Trading securities are held with an intention to buy and sell and make quick profits.

The trading securities are measured at the end of the year based on fair value of the investments. Fair value is equivalent to the market price of the investment. The market prices are available based on stock exchanges quotes for equity securities.

The difference between fair value and carrying value of trading securities is immediately recognised in the income statement. The unrealised loss is debited to income statement and unrealised gain is credited to income statement.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If equity investments are held as current assets, how can they be measured?
If equity investments are held as current assets, how can they be measured?
In the following paragraph Is FCA accounting for its equity investments in a way that is...
In the following paragraph Is FCA accounting for its equity investments in a way that is consistent with U.S. GAAP? explain... FCA Interests in other companies are measured at fair value. Investments in equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are recognized at cost. For investments classified as available-for-sale, financial assets gains or losses arising from changes in fair value are recognized in Other comprehensive...
Which are current liabilities? Current assets? Long-term assets? Long-term liabilities? Equity?
Which are current liabilities? Current assets? Long-term assets? Long-term liabilities? Equity?
The cash held by a business as well as the liquid short-term investments that can quickly...
The cash held by a business as well as the liquid short-term investments that can quickly converted into cash within a short period of time are called
A non current asset that is held to be distributed to the owners of the entity...
A non current asset that is held to be distributed to the owners of the entity would be presented and measured in the same way that a non current asset that is held for sale would be presented and measured.
Cash & Equivalents 31499 Short Term Investments 11044 Cash & Equivs & ST Investments 42543 Receivables...
Cash & Equivalents 31499 Short Term Investments 11044 Cash & Equivs & ST Investments 42543 Receivables (ST) - Inventories 10271 Current Tax Assets - Other Current Assets 0 Total Current Assets 52814 Gross Property Plant & Equip - Accumulated Depreciation - Net Property Plant & Equip 40707 Receivables (LT) 114497 Assets Held for Sale (LT) - Long Term Investments 2579 Intangible Assets 5945 Deferred LT Assets 5881 Discontinued Ops (LT Asset) - Other Assets 47053 Total Assets 269476 Accounts Payable...
1. Long-term investments are held for all of the following reasons except to a.improve operations by...
1. Long-term investments are held for all of the following reasons except to a.improve operations by making changes to management b.reduce expenses c.meet current cash needs 2. A company uses cash to pay all of the following except a.All of these choices are correct. b.depreciation expense c.interest to creditors d.dividends to stockholders d.stabilize the supply of resources 3.Accounting for the sale of stock is the same for both the cost and the equity methods of accounting for investments. True or...
1. Current ratio is measured by Current assets / Current liabilities. Assume current ratio is greater...
1. Current ratio is measured by Current assets / Current liabilities. Assume current ratio is greater than 100% (or 1:1) and that cash balance remains positive at all times. State the effect the following event occurring on the reporting date would have on this ratio. EVENT: Receipts from unearned revenue 2. A company reports Non-controlling interests within the equity section of its consolidated statement of financial position. Which of the following statements is correct? Group of answer choices a. No...
Critically discuss how financial leverage can impact investors’ return on equity with regard to property investments...
Critically discuss how financial leverage can impact investors’ return on equity with regard to property investments under the market scenario with high inflation rate and high interest rate 60 words max
How are current assets different from non-current assets? Can you provide an example of each? URGENT:...
How are current assets different from non-current assets? Can you provide an example of each? URGENT: NEED ANSWER ASAP PLEASE RESPOND WITH COPY AND PASTE, NOT ATTACHMENT USE ORIGINAL CONTENT NOT USED BEFORE ON CHEGG PLEASE ANSWER THROUGHLY TO ALL ANSWER TO BEST ABILITES ORIGINAL SOURCE NEVER USED BEFORE!!!
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT