An Exercise in Accounting for Marketable Securities
2 Pages Posted: 21 Oct 2008
Abstract
This exercise illustrates the accounting for passive equity investments in other companies (marketable equity securities). It focuses specifically on equity securities classified as either trading securities or AFS securities. It is intended for use in an introductory financial accounting course to introduce the accounting for marketable equity securities. It may be used as a stand-alone exercise or followed by the Berkshire Hathaway Inc.—Intercorporate Investments (A) and (B) cases (UVA-C-2240 and UVA-C-2276). The instructor may also assign the technical note, “Accounting for Marketable Securities,” (UVA-C-2280) to accompany the case.
Excerpt
UVA-C-2277
AN EXERCISE IN ACCOUNTING FOR MARKETABLE SECURITIES
The New Company started business in 2003. During the year, it made the following investment purchases:
Purchase Date
Security
# of Shares Purchased
Purchase Price per Share
10/03/2003
. . .
Keywords: accounting investments, intercorporate investments, marketable securities, market value method, trading securities, available-for-sale securities AFS
Suggested Citation: Suggested Citation