In: Accounting
Discuss and answer at least two of the questions listed below in detail.
1. Why should investment securities be separated into different classifications (Hold to Maturity, Available for Sale, etc.)? Why not just treat them the same so you don’t have to worry about their ability or intention?
2. Is it possible for a company to “manage” its bottom line by classification or reclassification of securities? If so, how? Is this ethical?
3. What are the disclosure requirements regarding Sarbanes-Oxley for investments?
4. Why would a company invest in another company’s equity? How about investing in another company’s debt securities? What might be some good reasons why a company would invest in another company’s debt securities?
5. Let’s talk about the Equity method. What is it? What disclosures are required? Why do you think the accounting rules require this kind of disclosure?