For financial reporting purposes, financial assets can be put into one of seven categories: subsidiaries, joint ventures,

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For financial reporting purposes, financial assets can be put into one of seven categories: subsidiaries, joint ventures, associates, held for trading, available for sale, held to maturity, and loans and receivables. For each of the following items, identify the possible categories into which it can be placed. More than one category is possible for an item.
Possible financial asset categories
a. Atlantic Company buys 5,000 common shares of a publicly traded company that has 200 million shares outstanding.
b. Beetleweed buys $20,000 in bonds maturing in five years.
c. A bank lends $400,000 to a person to purchase a home.
d. An exporter enters into a currency swap (a derivative contract) in order to secure the Canadian dollar price of a sale.
e. Elite Cars buys 800,000 shares in Selective Autos.
f. Fanciful Gifts buys 3,000 preferred shares in another company. These shares have no voting rights.
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Intermediate Accounting

ISBN: 978-0132612111

Volume 1, 1st Edition

Authors: Kin Lo, George Fisher

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