Loose Leaf for Financial Accounting: Information for Decisions
Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter C, Problem 1DQ

Under what two conditions should investments be classified as current assets?

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Summary Introduction

Concept Introduction:

Investments are classified into short term investments and long term investments according to the period of holding the investment. A short term investment is held for a period of less than one year. A long term investment is held for a period of more than one year.

To indicate: two conditions to classify an investment as current asset. 

Explanation of Solution

Investments are classified into short term investments and long term investments according to the period of holding the investment. An investment can be classified as a current asset if the following two conditions are satisfied:

1. The investment should be a short term investment, i.e. the holding period of the investment should be less than one year.

2. The investment should easily convertible into cash. For example short term investment in trading securities. 

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Chapter C Solutions

Loose Leaf for Financial Accounting: Information for Decisions

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The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License