Question
In: Accounting
What effect do Held to Maturity Bonds have on Net income? What effect do trading securities...
What effect do Held to Maturity Bonds have on Net income?
What effect do trading securities have on Net Income?
What effect does an Available for sale debt security have on Net Income?
What effect does an Equity Investment have on Net Income?
Solutions
Expert Solution
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| What effect do Held to Maturity Bonds have on Net income? |
| Held to Maturity Bonds only impact net income when dividends/interest are received. These are not revalued at the end of the every financial year but in case of major decline in cost the impact will be shown as impairment loss and to be adjusted with Net Income after adjusting with any available revaluation surplus first. |
| What effect do trading securities have on Net Income? |
| Trading securities impact net income when dividends/interest are received. These have to be revalued at the end of the every financial year and the revaluation gain or loss will be adjusted to Net Income. |
| What effect does an Available for sale debt security have on Net Income? |
| Available for sale debt security only impact net income when dividends/interest are received. These have to be revalued at the end of the every financial year but the revaluation gain or loss will not be adjusted to Net Income but rather shown separately as Other Comprehensive income. When these are finally sold then the gain or loss will be adjusted with net income. |
| What effect does an Equity Investment have on Net Income? |
| Any type of return from Equity Investment like interest or dividend will be adjusted from investment amount only and will not impact net Income. |
ekkarill92 answered 1 year agoRelated Solutions
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On December 31, 2019, Sumner Company held Wall Company bonds in its portfolio of trading securities....
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its portfolio of trading securities. The bonds have a par value of
$40,000, carry a 10% annual interest rate, mature in 2026, and had
originally been purchased at par. The market value of the bonds on
December 31, 2019 was $38,000.
On January 1, 2020, Sumner acquired bonds of Doherty Company
with a par value of $30,000 for $30,200. The Doherty Company bonds
carry an annual interest rate of...
What is the difference between a trading security, available-for-sale, and held-to-maturity investment? What is the equity...
What is the difference between a trading security,
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10
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7.
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1 8.
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How would each of the following be reported in the income
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