Trading investments are categorized on the balance sheet as


Any fair value changes in government securities are not recognized. You are a Treasury Accountant at Flow, Inc. Designated at fair value through profit and loss: The investment in government securities should be carried at amortized cost recognizing interest income in income statement.

The investment in government securities should be carried at amortized cost recognizing interest income in income statement. However, new accounting standards IFRS 9 require classifying debt investments into two categories: For example, government bonds, corporate bonds, municipal bonds, notes receivable, etc. Any fair value changes in government securities are not recognized.

Interest income is recognized in the period in which it is earned. Debt securities are financial instruments that represent right to a determined stream of cash flows for a definite period of time. Held for trading investments are reported at fair value and any resulting gain or loss or interest income is recognized in income statement.

Investments which are expected to be sold within next 12 months are called short-term investments while investments other than short-term investments are called long-term investments. Investments are made through purchase of bonds or shares or other financial instruments of the investee. During the year, the company entered into the following transactions: At the year end, i. Held to maturity investments are recognized at fair value initially and subsequently measured at amortized cost using effective interest rate method.

Unrealized gains or losses is recognized in other comprehensive income. At the year end, i. Dividend income is recognized in profit and loss.

During the year, the company entered into the following transactions:. A newly appointed Treasury Manager embarked on an aggressive investment spree. You are a Treasury Accountant at Flow, Inc. Held for trading investments are reported at fair value and any resulting gain or loss or interest income is recognized in income statement. Any fair value changes in government securities are not recognized.

They require such equity investments to be accounted for either as a fair value through profit and loss or b fair value through other comprehensive income. Debt securities are financial instruments that represent right to a determined stream of cash flows for trading investments are categorized on the balance sheet as definite period of time. Held for trading investments are reported at fair value and any resulting gain or loss or interest income is recognized in income statement. Equity securities Accounting for equity investments depends on the extent of ownership: