1. Investments Sid Glandon, DBA, CPA Assistant Professor of Accounting The University of Texas at El Paso

2. Debt Securities Classified as held-to-maturity Positive intent and ability to hold to maturity Classified as trading Help for sale in near term to generate income Classified as available-for-sale Not classified as held-to-maturity or trading securities

3. Debt Securities Classified as Held-to-Maturity Valuation Amortized cost Unrealized holding gains or losses Not recognized Other income Interest earned Realized gains and losses from sale

4. Debt Securities Classified as Trading Valuation Fair value Unrealized holding gains or losses Recognized in net income Other income Interest earned Realized gains and losses from sale

5. Debt Securities Classified as Available-for-Sale Valuation Fair value Unrealized holding gains or losses Recognized as other comprehensive income Recognized as separate component of stockholders’ equity Other income Interest earned Realized gains and losses from sale

6. Investment in Debt Securities

7. Classified as Trading: Journal Entry

8. Classified as Trading

10. Classified as Available-for-sale

11. Classified as Available-for-Sale

13. Classified as Held-to-Maturity No entry for fair value adjustment Fair value changes are not recognized at the balance sheet date Securities are reported at amortized cost

14. Equity Securities Ownership interests Include rights to buy or sell ownership Extent of ownership determines accounting treatment for equity securities

15. Degrees of Control

16. Available-for-Sale Less than 20% ownership interest Recorded at cost Valued and reported at fair value Dividends are recognized as income Unrealized holding gains and losses Part of comprehensive income A component of stockholders’ equity

17. Trading Less than 20% ownership interest Recorded at cost Valued and reported at fair value Dividends are recognized as income Unrealized holding gains and losses Recognized in net income

18. Equity Method Between 20% and 50% ownership interest Substantive economic relationship Investor’s carrying value Increased by proportionate share of earnings Decreased by Dividends, and Proportionate share of losses

19. Consolidation More than 50% voting interest Investor is parent Investee is subsidiary Investor prepares consolidated financial statements Investor accounts for investment on its books using the equity method

20. Investments In Equity Securities

21. Accounting by Category

22. Transfers of Classifications