Chapter 13: Q15 (page 658)
Distinguish between the accounting treatment for marketable versus nonmarketable equity securities.
The difference between Marketable securities and non-marketable securities is the price at which both are recorded.
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Question: At what amount should trading, available-for-sale, and held-to-maturity debt securities be reported on the balance sheet?
Southeast Airlines Inc. awards members of its Flightline program a second ticket at half price, valid for 2 years anywhere on its flight system, when a full-price ticket is purchased. How would you account for the full-fare and half-fare tickets?
Where can authoritative IFRS be found related to investments?
Komissarov Company has a debt investments in the bonds issued by Keune Inc. The bonds were purchased at par
for \(400,000 and, at the end of 2017, have a remaining life of 3 years with annual interest payments at 10%, paid at the end of each year. This debt investment is classified as held-for-collection. Keune is facing a tough economical environment and informs all of its investors that it will be unable to make all payments according to the contractul terms. The controller of Komissarov has prepared the following revised expected cash flow forecast for this bond investment.
December 31, Expected cash flows
2018 \)35,000
2019 35,000
2020 385,000
Total cash flows $455,000
Instructions
(a) Determine the impairement loss for Komissarov at December31, 2017.
(b) Prepare the entry to record the impairement loss for Komissarov at Decembber 31, 2017.
(c) On January 15, 2018, Keune receives a major capiatl infusion from a private equity investor. It informs Komissarov that the bonds now will be paid according to the contractual terms. Briefly describe how the Komissarov would account for the bond investment in light of this new information.
How is present value related to the concept of a liability?
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