Question

Question 1

1. Where can you find the significant account policies used by the company in the Notes to Consolidate Financial Statements (state the name and the number of the note)?
2. Summarize accounting policies for investments.

Question 2

In the space below, prepare a list of UPS’s investments from the following items: Held-to-maturity Trading Available-for-sale	What valuation method the company uses for each type of investments? FVTOTC FVTPL Amortization cost	Where are UNREALIZED gains or losses on each type of investments presented? Income statement Comprehensive income Not relevance	Where are REALIZED gains or losses on each type of investments presented? Income statement Comprehensive income Not relevance

Question 3

From the 2017 financial statements of UPS, provide the amount for the following items:

1. Total fair value of trading and available-for-sale securities: ____________

2. Total fair value of trading securities: _____________

3. Total cost of trading securities: _______________

4. Total unrealized gain (loss) of trading securities: ____________

5. Total fair value of available-for-sale securities: _______________

6. Total cost of available-for-sale securities: _________________

7. Total unrealized gain (loss) for available-for-sale securities: ____________

8. Accumulated other comprehensive gain or loss: ____________

9. Investment income and other: ________________

10. Change in unrealized gains or losses on marketable securities: __________

11. Diluted earnings per share? ___________

Answer 1

Solution to Question 1

The significant account policies used by the company in the Notes to Consolidate Financial Statements is under Summary of Accounting Policies as Note 1.

The summarized accounting policies for investment is as follows:

Long term investments are carried at cost less provision made to recognize any decline, other than temporary in the values of such investments. Current investments are carried at cost or fair value, whichever is lower.

solution to Question 2

UPS's investments	valuation method	Presentation of Unrealized gains or losses	Presentation of realized gains or losses
Trading	FVTPL	Income Statement	Income Statement
Available-for-sale	FVTOTC	Comprehensive Income	Income Statement

Solution to Question 3

Particulars	Amount(in millions)
Total fair value of trading and available-for-sale securities	$ 749
Total fair value of trading securities	$ 168
Total cost of trading securities	$ 152
Total unrealized gain (loss) of trading securities	$ 16
Total fair value of available-for-sale securities	$ 581
Total cost of available-for-sale securities	$ 584
Total unrealized gain (loss) for available-for-sale securities	$ (3)
Accumulated other comprehensive gain or loss	$ (4,867)
Investment income and other	$ 72
Change in unrealized gains or losses on marketable securities	$ (1)
Diluted earnings per share	$ 5.61