Classify Each of the Following Items into One of the Seven

question 22

Essay

Classify each of the following items into one of the seven categories of financial assets relevant for financial reporting purposes. Select the category that best suits the situation given.
$\begin{array}{|l|lcc|}\hline& \text {Financial asset category relevant for}\\&\text { financial reporting purposes}\\\hline \text {Purchase of 1000 shares of Hobster Corp, a} & \\\text { public company with 10 million shares}\\\text { outstanding.}\\\hline \text {Investment in \( 60 \% \) of the outstanding shares of}&\\ \text {HKY Inc. An agreement with the company's}&\\ \text {founder specifies that he retains the right to make}\\ \text { all operating decisions for \( \mathrm{HK} \).}\\\hline \text {BEECorp. buys \( 15 \% \) of the outstanding shares of}\\ \text {CEE Corp. After the purchase, BEE appoints its}\\\\text { chief executive officer to the board of directors of}\\\text { CEE.}\\ \hline \text {Investment in 8,000 shares of CIBC. Management}\\ \text {believes that shares are currently underpriced.}\\\hline\end{array}$

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Definitions:

Beginning Balances

The balances of accounts at the start of a new accounting period, carried over from the end of the prior period.

Transactions

Financial events that affect the financial position of a company, measurable in terms of changes in assets, liabilities, and equity.

Statement Of Owner's Equity

A financial statement that shows the changes in the ownership interest of a company over a period of time.

Balance Sheet

A balance sheet is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.