中级财务会计英文版第九章课后题答案

中级财务会计英文版第九章课后题答案Chapter9:Long-Term Investments

1.Define long-term investmentsand provideexamplesLong-term investmentsare assetsthat acompany holdsfor an extendedperiod,typically formore thana year.These investmentsare notintendedto besold orconverted intocash in the shortterm.Examples of long-terminvestments includestocks,bonds,real estate,and investmentsin othercompanieso

2.What isthe accounting treatment for long-term investmentsLong-term investmentsare initiallyrecorded at cost,which includesthepurchase priceas wellas anyacquisition-related costs.Subsequently,they areaccounted forusing the fair value method orthe equitymethod,depending on the levelof influencethe company has over the investeeo

3.Explain thefair value method of accounting for long-term investmentsoUnderthefair valuemethod,long-term investmentsare reported at theirfair value on the balance sheet.Any changes in fairvalue are recognized inthe income statementas unrealized gains or losses.This methodis typicallyusedfor investmentsin securities that areactively tradedin themarketo

4.Explain theequity methodof accountingforlong-term investmentsoTheequity methodis usedwhen acompanyhassignificant influence,butnot control,over theinvestee.Under thismethod,the initialinvestment isrecordedatcostand subsequentlyadjusted for the companysshare of theinvestees earningsor losses.These adjustmentsare recordedas investmentincomeorlosson the income statemento

5.What isthe differencebetween tradingsecurities,available-for-salesecurities,and held-to-maturity securitiesTradingsecurities arebought andheld primarilyfor thepurpose ofsellingthem inthe nearterm togenerate profits.They arereported atfairvalue,and anychangesin fairvalue arerecognized intheincome statementoAvailable-for-sale securities are investmentsthat arenot classifiedastrading securitiesor held-to-maturity securities.They arereported atfairvalue,but changesinfairvaluearerecognized inother comprehensiveincomeuntil thesecuritiesaresoldoHeld-to-maturity securitiesare debtsecuritiesthatthe companyintendsto holduntil maturity.They arereportedatamortized cost,and anyinterestincome is recognizedintheincome statement

6.How aredividends from long-term investmentsaccounted forunder theequity methodDividends receivedfromlong-term investmentsunder theequitymethodarerecorded as a reductionof the investments carrying value.They arenotrecognized asrevenue on theincome statement

07.What areimpairment losses,and howare theyaccounted forImpairmentlosses occurwhen thefairvalueofa long-term investmentdecreasesbelow itscarrying value.These lossesarerecognized asan expenseontheincomestatementand reducethe investmentscarryingvalue onthe balance sheeto

8.Explain theaccounting treatmentforthesale ofalong-terminvestmentoWhen along-term investmentis sold,any differencebetween thesalesproceeds and theinvestmentscarryingvalueisrecognizedasagain orlosson theincomestatement.The investmentis removedfrom thebalancesheet,and anydividends receivedare recordedas revenueo

9.Why isthe classificationof long-term investmentsimportantThe classificationoflong-term investmentsdetermines howthey arereportedonthebalancesheetand thesubsequent accountingtreatment.It alsoaffectsthe financialratios andanalysis ofa companysfinancial statements.The classificationprovides informationabout thecompanys investmentstrategyand theexpected timingof cashflows fromthe investmentSo

10.What disclosuresare requiredforlong-term investmentsin thefinancialstatementsFinancial statementsmust disclosethe natureoftheinvestments,the fairvalueof eachmajor categoryof investments,the costor amortizedcost ofeachmajor categoryof investments,and anyunrealizedgainsor losses.Additionally,significant restrictionsontheability tosell oruse theinvestmentsmust bedisclosedoIn conclusion,long-term investmentsare assetsheld foranextendedperiod,and theiraccountingtreatmentdepends onthe levelof influencethecompany hasovertheinvestee.The fairvaluemethodandtheequity methodarethe twomain accountingmethods forlong-term investments.It isimportantto classifylong-term investmentscorrectly toensure accuratefinancialreporting andanalysis。