Question

What are the valuation guidelines for investments at a balance sheet date?​

Answer 1

Answer:

Explanation:

The investments are valued as follows-

- Trading securities: They are valued at the FMV at the date of the balance sheet. Their unrealized gain/loss is recorded in the income statement.

- AFS securities: They are recorded at their FMV on the balance sheet date. The unrealized gains/losses are included in OCI

- HTM securities: They are reported at amortized costs in the balance sheet. No adjustment is made for unrealized gains/losses on such securities.

Answer 2

Equity Method of Accounting

The original investment is recorded on the balance sheet at cost (fair value). Subsequent earnings by the investee are added to the investing firm's balance sheet ownership stake (proportionate to ownership), with any dividends paid out by the investee reducing that amount.