An important part of the accounting for minority passive investments is the distinction between investments categorized as trading, available-for- sale, or he Id-to maturity.
Required:
1. When a company has excess cash, what types of securities may it invest in?
2. Explain why a company invests in debt and equity securities.
3. Explain how the distinction between the three categories is made.
4. Discuss the distinction between realized and holding gains and losses on investments in debt and equity securities.
5. Explain how a company discloses realized and holding gains and losses on investments in equity securities on its financial statements.