ACCT 540 Proper accounting treatment
for bonds
You have been hired as a consultant
for ABC Investment Group. ABC incorporated in 1999 and manages investment
portfolios for small to medium size companies. The Director of the company is
not up to speed on how unrealized gains and losses as well as realized gains
and losses on bonds should be accounted for. The Director has been told that
under certain conditions unrealized gains and losses can be accounted for in
the income statement and accounted for as part of other comprehensive income
under other conditions. The Director is also unclear as to how to determine
whether a security is impaired and how to determine the amount that is required
to be written down. You have been asked to look into these issues and determine
the proper accounting treatment for bonds.
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