Chapter 9
Investments
432
AS-2 (
1
4
)
Explain how long-term investments are classified on a balance sheet. Name a few long-term
investments.
AS-3 (
1
)
Ava Company issues 10-year, $1,000,000 term bonds paying 3% semi-annual interests. Bea
Company purchased 20% of these term bonds on the issuance date. Which company is the
investor and which company is the investee?
AS-4 (
1
)
Sometimes terms are used such as debt or equity instruments versus debt or equity securities.
What is the difference between a security and an instrument?
AS-5 (
1
)
Zed Company, a public company, is planning to invest in a 20-year debt security for the
purpose of selling it within six months to make a profit. Which method should Zed Company
use for accounting of this investment?
