Chapt.

11 Investments – Additional Concepts

Regular way purchase or sale of financial assets – is a purchase or sale of financial

assets under contract within established time frame.
Accounting for regular way purchase or sale - is recognized and derecognized, as
applicable using trade date and settlement date accounting.
Trade date – date an entity commits to purchase financial asset.
Settlement date – date when financial assets are transferred.
In trade date accounting the financial asset is:
-recognized when acquired on the trade date
-derecognized when sold on the trade date
In settlement date accounting the financial asset is:
-recognized when acquired on the settlement date
-derecognized when sold on the settlement date

Reclassification – financial assets are reclassified only when the entity changes its
business model.

Dividends – includes cash, property and share dividends

Cash Dividends – dividends in form of cash

Property dividends – dividends in a form of non-cash assets
Share dividends – dividends in form of equity securities

Recognition of dividend revenue – only cash and property dividends are recognized
while share dividends are not.

Measurement of dividends
Cash – amounts of cash
Property – fair value of non-cash asset
Share – fair value and corresponding gain
Liquidating – deducted from carrying amount of investment

Share split – when investee called in issued share and replaces with new shares
whether larger number with decrease par or smaller number with increased par.

Accounting for share splits – If investment is measured at fair value, change in fair
value is recognized as loss or gain. If the investment is in unquoted equity securities
measured at cost, only memo entry is needed.

Stock rights –the existing shareholders have the right to purchase from the new
issued shares by the corporation.

Accounting for stock rights – stock rights are measured at fair value