Using Examples, Explain Why This Description May Be Accurate

question 14

Essay

Using examples, explain why this description may be accurate.

Distinguish between equity securities that do and do not qualify as investments in securities (e.g., common stocks, preferred stocks, convertible bonds, stock options).

Interpret how to account for investments in debt securities, exempting certain securities that don’t qualify.

Understand the distinctions and appropriate use of the equity method, cost method, and consolidation method for accounting for investments.

Comprehend the accounting and reporting requirements for unrealized gains and losses, including how they are reflected on the financial statements.