Question

In what section of the balance sheet should the following items appear, and what balance sheet terminology would you use?

(a) Treasury stock (recorded at cost).

(b) Checking account at bank.

(c) Land (held as an investment).

(d) Sinking fund.

(e) Unamortized premium on bonds payable.

(f) Copyrights.

(g) Pension fund assets.

(h) Premium on common stock.

(i) Long-term investments (pledged against bank loans payable).

Short answer

Items	Balance sheet section	Terminology
Treasury stock (recorded at cost)	Shareholders’ equity	Treasury stock (recorded at cost)
Checking account at a bank	Current asset	Cash at bank
Land (held as an investment)	Long-term investment	Land held as an investment
Sinking fund	Long-term investment	Sinking Fund
Unamortized premium on bonds payable	Non-Current liabilities	Unamortized premium on bonds payable
Copyrights	Intangible Asset	Copyrights
Pension fund assets	Investments	Employee pension funds
Premium on common stock	Shareholders’ equity	Additional paid-in-capital
Long-term investments (pledged against bank loans payable)	Investments	Long-term investments (pledged against bank loans payable)

Step-by-step solution

Definition of Checking Account

A bank account maintained by the business entity or any individual thatallows unlimited deposits and withdrawal is a checking account. It is different from a savings account.

Balance sheet section of each account

1. Treasury stock is a contra-equity account reported in the shareholder’s equity section and deduction from the retained earnings.

2. Checking account is the bank account and reported in the current asset as cash in the bank.

3. Land held for investment will be treated as an investment and reported in long-term investment on the asset side.

4. Sinking fund is also treated as a long-term investment and reported on the asset side of the balance sheet.

5. Unamortized premium on bonds payable is reported in the non-current liabilities section and deducted from the bonds payable.

6. Copyrights are reported under intangible assets on the asset side of the balance sheet.

7. Pension fund assets are reported under-investment as employee pension funds on the asset side of the balance sheet.

8. Premium on common stock is reported as additional paid-in-capital in the shareholder’s equity section.

9. Long-term investment given as collateral must be reported on the asset side as an investment along with collateral information.