Kfc Vietnam
Motivation for Investments
Companies make investments for at least three reasons. First, companies transfer excess cash into investments to produce higher income. Second, some entities, such as mutual funds and pension funds, are set up to produce income from investments. Third, companies make investments for strate gic reasons. Short-Term Investments Cash equivalents are investments that are both readily converted to known amounts of cash and mature within three months. Many investments, however,mature between 3 and 12 months. These investments are short-term investments, also called temporary investments and marketable securities. Specifically, short-term invest ments are securities that (1) management intends to convert to cash within one year or the operating cycle, whichever is longer, and (2) are readily convertible to cash. Short-term investments are reported under current assets and serve a purpose similar to cash equivalents. Long-Term Investments Long-term investments in securities are defined as those securities that are not readily convertible to cash or are not intended to be converted into cash in the short term. Long-term investments can also include funds earmarked for a special purpose,such as bond sinking funds and investments in land or other assets not used in the company’s operations. Long-term investments are reported in the noncurrent section of the balance sheet, often in its own separate line titled Long-Term Investments. Debt Securities versus Equity Securities Investments in securities can include both debt and equity securities. Debt securities reflect a creditor relationship such as investments in notes, bonds, and certificates of deposit; they are issued by governments, companies, and individuals. Equity securities reflect an owner relationship such as shares of stock issued by companies.
Debt Securities: Accounting Basics
This section explains the accounting basics for debt securities,including that for acquisition,
Companies make investments for at least three reasons. First, companies transfer excess cash into investments to produce higher income. Second, some entities, such as mutual funds and pension funds, are set up to produce income from investments. Third, companies make investments for strate gic reasons. Short-Term Investments Cash equivalents are investments that are both readily converted to known amounts of cash and mature within three months. Many investments, however,mature between 3 and 12 months. These investments are short-term investments, also called temporary investments and marketable securities. Specifically, short-term invest ments are securities that (1) management intends to convert to cash within one year or the operating cycle, whichever is longer, and (2) are readily convertible to cash. Short-term investments are reported under current assets and serve a purpose similar to cash equivalents. Long-Term Investments Long-term investments in securities are defined as those securities that are not readily convertible to cash or are not intended to be converted into cash in the short term. Long-term investments can also include funds earmarked for a special purpose,such as bond sinking funds and investments in land or other assets not used in the company’s operations. Long-term investments are reported in the noncurrent section of the balance sheet, often in its own separate line titled Long-Term Investments. Debt Securities versus Equity Securities Investments in securities can include both debt and equity securities. Debt securities reflect a creditor relationship such as investments in notes, bonds, and certificates of deposit; they are issued by governments, companies, and individuals. Equity securities reflect an owner relationship such as shares of stock issued by companies.
Debt Securities: Accounting Basics
This section explains the accounting basics for debt securities,including that for acquisition,