Chapter Questions
What is a debt security?
What is an equity security?
Why would a company invest in debt or equity securities?
Briefly describe the specific types of debt and equity securities.
How is the purchase of a held-to-maturity debt security at face value recorded?
When disposing of an available-for-sale debt investment, where is the gain or loss on disposal reported in the financial statements?
What method is used for investments in equity securities when the investor has significant influence and typically $20 \%$ to $50 \%$ ownership? Briefly describe how dividends declared and received and share of net income are reported.
What method is used for investments in equity securities with more than $50 \%$ ownership? Briefly describe this method.
What adjustment must be made at the end of the period for trading debt investments and available-for-sale debt investments?
Where on the financial statements is an unrealized holding gain or loss on trading debt investments reported?
Where on the financial statements is an unrealized holding gain or loss on availablefor-sale debt investments reported?
What is comprehensive income, and what does it include?
How are held-to-maturity debt investments reported on the financial statements?
What does the rate of return on total assets measure, and how is it calculated?