Cascade Co. is planning to invest some of its excess cash in 5-year bonds issued by Joyce Co. and in the 2% of ordinary shares of Teton Co. Both Joyces bonds and Tetons shares are traded actively on securities market. Cascade Co. plans to hold the bond for long term and the shares for speculation. Regarding the accounting for these investments, answer the following

questions: 1. What is a financial asset? 2. Physical assets holder generate cash by using or selling the assets. For example, a property holder can enjoy rental income, and an inventory holder can sell it for revenue. How is a physical asset different from a financial asset? 3. What is the accounting treatment for a bond holder in general? 4. What is the accounting treatment for an equity holder in general? 5. After investing, the market value of the bond and shares fluctuate, how should Cascade account for it?