1.
FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet
various investment objectives. The following selected transactions relate to FF&T
FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet
various investment objectives. The following selected transactions relate to FF&T
Solution
Ans.
There are two methods used to report investments that are related to the purpose of
making the investment: Fair Market Value Method and Equity Method
Fair Market Value Method: Records investments made for appreciation and income
Use this method when:
1) You have no significant influence or control (usually owning < 20% indicates)Â Â 2) The
market price is reliable
Securities to Be Held to Maturity Debt securities that are classified as
held-to-maturity indicate that the company has both the ability and
intent to hold the securities until maturity. The investor company does
not have any influence over the operating or financial policies of the
investee company. The investment in debt securities that are held-to-
maturity are recorded at original cost on the date of acquisition.