Accounting for Investments - v16 (Course Id 2823)

• Who is this course for?
  This course is for individuals needing Continuing Professional Education (CPE), particularly those with a basic accounting background seeking to expand their knowledge of investment accounting.
• What is this course about or what problem does this course solve?
  This course explains the accounting and reporting requirements for investment securities, including debt and equity securities, and provides guidance on classification, valuation, impairment, and application of the equity method.
• Where can the knowledge from this course be used?
  The knowledge can be applied in financial reporting, corporate accounting, and any professional setting where accounting for investment securities is required.
• Why is this course important to a CPA or Accountant?
  This course is important because it helps CPAs and accountants correctly account for and report investment securities, ensuring compliance with accounting standards and accurate financial statements.
• When is this course relevant or timely?
  This course is relevant whenever professionals are dealing with investments in securities, preparing financial statements, or needing updated knowledge on accounting standards as of its 2026 release.
• How is a course like this consumed or used?
  This is a QAS self-study text-based course that is completed independently, followed by a final exam that must be passed with a minimum score of 70% to earn CPE credit.

Companies have different motivations for investing in securities issued by other companies. One motivation is to earn a high rate of return. Another motivation for investing (in equity securities) is to secure certain operating or financing arrangements with another company. This course addresses the accounting and reporting requirements for investment securities and includes specific examples to illustrate the application. Key aspects of debt securities, such as classification, purchases, transfers, impairments, and presentation and disclosure, are addressed. The course also discusses how to account for equity securities and the impairment of investments. Finally, the course explains when to use the equity method and how to apply the equity method. 

NASBA QAS - Text - NASBA Registry - 2823

Course Learning Objectives

1. Identify the characteristics of trading securities, available-for-sale securities, and held-to-maturity securities.
2. Recognize the proper accounting treatment for investments in debt securities.
3. Identify how purchases, sales, and changes in fair value of securities affect different accounts.
4. Recognize the accounting models that apply to credit impairment of debt securities.
5. Recognize the proper accounting treatment for investments in equity securities.
6. Identify the proper classification and disclosure for investments in securities.
7. Identify key requirements for using the equity method.

Chapter 1 - Accounting for Investments

Part I:    Accounting and Reporting Standards for Investment

Background

Scope and Scope Exceptions

Part II:    Accounting for Debt Securities

Definition of Debt Securities

Classification of Debt Securities

General Rules

Trading

Available-for-Sale

Held-to-Maturity

Review Questions - Section 1

Reassessment of Classification

General Rules

Transfers from or into Trading

Transfer from Held-to-Maturity to Available-for-Sale

Transfer from Available-for-Sale to Held-to-Maturity

Impairment and Credit Losses

General Rules

Available-for-Sale Impairment

Held-to-Maturity Impairment

Presentation and Disclosure

General Rules

Trading

Available-for-Sale

Held-to-Maturity

Other Matters

Income Effect

Amortization of Bond Discount or Premium

Investments by Banks

IFRS Connection

Review Questions - Section 2

Part III:    Fair Value Method Accounting for Equity Securities

Definition of Equity Securities

General Rules

Presentation and Disclosure

Other Matters

Lump-Sum Purchase

Exchange (Conversion) of Securities

Stock Dividends

Stock Splits

Preferred Stock Received for Common Stock Dividend

Review Questions - Section 3

Part IV:    Equity Method Accounting for Equity Securities

General Rules

Equity Accounting

Overview

Adjustments to Earnings and Losses

Presentation and Disclosure

Review Questions - Section 4

Glossary