Investments Flashcards
1
Q
Why do corporations invest
A
Corporations invests for strategic reaons, to generate earnings from investment income and may have excess un needed cash
2
Q
Entry for Acquisition of Debt Investment
A
DR: Debt Investment
CR: Cash
3
Q
Entry for Bond Interest Revenue
A
DR: Cash
CR: Bond Interest Revenue
4
Q
Sale of Debt Investment
A
DR: Cash , Loss on Sale
CR: Debt Investment , Gain on Sale
5
Q
Stock Investments (less 20%)
A
Acquisition
DR: Stock Investment
CR: Cash
Recording Dividends
DR: Cash
CR: Dividend Revenue
6
Q
Stock Investments (20% - 50%)
A
Equity method - the investor records its share of investees net income in year earned
DR: Stock Investment
CR: Revenue from investment
