Chapter 13: 12Q (page 658)
Identify and explain the different types of classifications for investments in equity securities.
Equity Securities have three types of investment. These are:
a. Holding less than 20% shares
b. Holding between 20% to 50% shares
c. Holding more than 50% shares
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Where can authoritative IFRS be found related to investments?
Question: What evidence is necessary to demonstrate the ability to defer settlement of short-term debt?
Faith Battle operates a health food store, and she has been the only employee. Her business is growing, and she is considering hiring some additional staff to help her in the store. Explain to her the various payroll deductions that she will have to account for, including their potential impact on her financial statements, if she hires additional staff.
How does unearned revenue arise? Why can it be classified properly as a current liability? Give several examples of business activities that result in unearned revenues.
(Available-for-Sale and Held-to-Maturity Debt Securities Entries) The following information relates to the debt
securities investments of Wildcat Company.
1. On February 1, the company purchased 10% bonds of Gibbons Co. having a par value of \(300,000 at 100 plus accrued interest.
Interest is payable on April 1 and October 1.
2. On April 1, semiannual interest is received
3. On July 1, 9% of bonds of Sampson, Inc. were purchased. These bonds with a par value of \)200,000 were purchased at 100
plus accrued interest. Interest dates are June 1 and December 1.
4. On September 1, bonds with a par value of $60,000, purchased on February 1, are sold at 99 plus accrued interest.
5. On October 1, semiannual interest is received.
6. On December 1, semiannual interest is received.
7. On December 31, the fair value of the bonds purchased February 1 and July 1 were 95 and 93, respectively.
Instructions
(a) Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are
available-for-sale securities.
(b) If Wildcat classified these as held-to-maturity investments, explain how the journal entries would differ from those in part (a).
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