Chapter 12 – Investments

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Chapter 12 – Investments
1. Describe the company’s investment policies.

Their investment policy requires the purchase of top-tier investment grade securities, the diversification of asset types and includes certain limits on their portfolio duration as specified in our investment policy guidelines. All marketable securities are held in their name, managed by several investment managers and held by one major financial institution under a custodial arrangement.  

2. What is the amount and classification of any investment in securities reported on the balance sheet? Are unrealized gains or losses reported in the shareholder’s equity section?

In the Balance sheet section, there is a Marketable Security $1,281,006 which is classified as Current Asset. There is an unrealized gain $6,703 under Comprehensive Income in the shareholder’s equity section.

3. Are any investments reported by the equity method?

There are no investments reported by the equity method.

4. What amounts from these investments are reported in the comparative income statements? Has the income increased or decreased over the years reported?

The investment including Money market funds, corporate debt securities and Debt securities issued by United States Treasury total are $1,592,973 in 2010. In 2009, these investments total are $1,020,970 in the income statement. The income has increased over the last 2 years reported.

5. Are any acquisitions or disposals of investments reported in the statement of cash flows?

Yes, in the consolidated of Cash flows section, there are Proceeds from sales and maturities of marketable securities and Acquisition of businesses, net of cash and cash equivalents under the Cash flows from investing activities.
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