ACCTMIS 2200
Investments
●Why corporations invest?
●The accounting for investments depends on:
1. What type of investment has been acquired
■Debt securities v. equity securities
2. The percentage of ownership obtained when acquiring equity security
investments.
■Do you own more or less than 20% of the other company’s outstanding
stock?
○Investment in debt securities and investments in equity securities where you
own less than 20% of the other company’s outstanding stock:
1. When the investment is acquired, record it at cost (represents an asset).
2. If any dividends are received, record them as dividend revenue.
lOMoARcPSD|9327020
