C H A P T E R   17
                    C H A P T E R   17
                      INVESTMENTS
                      INVESTMENTS
                   Intermediate Accounting
                          IFRS Edition
                     Kieso, Weygandt, and 
                           Warfield 
  17-2
                         Learning Objectives
                         Learning Objectives
                         Learning Objectives
                         Learning Objectives
     1.   Describe the accounting framework for financial assets.
     2.   Understand the accounting for debt investments at amortized cost.
     3.   Understand the accounting for debt investments at fair value.
     4.   Describe the accounting for the fair value option.
     5.   Understand the accounting for equity investments at fair value.
     6.   Explain the equity method of accounting and compare it to the fair 
          value method for equity investments.
     7.   Discuss the accounting for impairments of debt investments.
     8.   Describe the accounting for transfer of investments between 
          categories.
   17-3
                              Investments
                              Investments
                              Investments
                              Investments
                                Investments in        Other Reporting 
         Debt Investments       Investments in        Other Reporting 
         Debt Investments      Equity Securities          Issues
                               Equity Securities          Issues
         Amortized cost
         Amortized cost        Fair value            Impairment of value
                               Fair value            Impairment of value
         Fair value
         Fair value            Equity method         Transfers between 
                               Equity method         Transfers between 
                                                     categories
         Fair value option                           categories
         Fair value option     Consolidation
                               Consolidation
                                                     Fair value controversy
         Summary of debt                             Fair value controversy
         Summary of debt 
         investment accounting
         investment accounting                       Summary
                                                     Summary
   17-4
               Accounting for Financial Assets
               Accounting for Financial Assets
                Accounting for Financial Assets
                Accounting for Financial Assets
       Financial Asset 
          Cash.
          Equity investment of another company (e.g., ordinary or 
             preference shares). 
          Contractual right to receive cash from another party 
             (e.g., loans, receivables, and bonds).
       IASB requires that companies classify financial assets into two 
       measurement categories—amortized cost and fair value—
       depending on the circumstances.
   17-5                    LO 1  Describe the accounting framework for financial assets.
               Accounting for Financial Assets
               Accounting for Financial Assets
                Accounting for Financial Assets
                Accounting for Financial Assets
       Measurement Basis—A Closer Look
         IFRS requires that companies measure their financial assets 
         based on two criteria:
            Company’s business model for managing its financial 
               assets; and
            Contractual cash flow characteristics of the financial 
               asset.
       Only debt investments such as receivables, loans, and bond 
       investments that meet the two criteria above are recorded at amortized 
       cost. All other debt investments are recorded and reported at fair value.
   17-6                    LO 1  Describe the accounting framework for financial assets.