Module 1
WHY CORPORATIONS INVEST
The accounting for investments depends on:
1. What type of investment has been acquired
• debt securities (represent buying bonds) v. equity securities (represent buying stock of
another company)
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
Investments in debt securities and investments in equity securities where you own less than
20% of the other company’s outstanding stock:
4 Accountable Events’ Related to These Investments:
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