Asked by Krupa Patel on Jun 14, 2024
Verified
In substance,investments in equity securities may be classified as:
A) trading investments at fair value, where increments and decrements in the fair value of the investments are recognised in the income statement.
B) available-for-sale investments.
C) equity investments in subsidiaries, associates and joint venture entities.
D) all of the above.
Trading Investments
Securities bought and held primarily for selling them in the short term to profit from price fluctuations.
Fair Value
The estimated market value of an asset or liability, based on current prices in an active market.
Income Statement
A financial statement that shows a company's revenues, expenses, and net income over a specific period, highlighting the company's financial performance.
- Ascertain the types of entities that qualify as subsidiaries and the breadth of equity security investments governed by appropriate accounting standards.
Verified Answer
KS
Kamen SentaiJun 15, 2024
Final Answer :
D
Explanation :
All of the above options are correct classifications of investments in equity securities. Trading investments are those bought and held with the intention of selling in the near term, available-for-sale investments are those held for an undefined period and may be sold when deemed necessary, and equity investments in subsidiaries, associates, and joint venture entities refer to ownership in other companies.
Learning Objectives
- Ascertain the types of entities that qualify as subsidiaries and the breadth of equity security investments governed by appropriate accounting standards.