Investments
Code: 1250Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Debit |
Definition
Funds invested in financial assets to generate future returns
Sub-accounts
📐 IFRS vs US GAAP Accounting Treatment
IFRS 9 uses business model test; GAAP uses intent-based HTM/AFS/Trading categories
❓ Frequently Asked Questions
A: Investments are financial assets owned by the company to generate future returns (dividends, interest, or capital appreciation), not for use in operating activities. They include stocks, bonds, mutual funds, and investments in associates or subsidiaries.
A: Investments are classified as: short-term investments (current) if the intention is to sell within one year, and long-term investments (non-current) if the intention is to hold for more than one year. This classification affects their presentation on the balance sheet.
A: Stocks represent partial ownership in a company, and their return is dividends (not guaranteed) and capital appreciation. Bonds represent debt issued by an entity (government or company), and their return is fixed and guaranteed interest paid at maturity.
A: Short-term: held for sale within one year, classified as current assets. Long-term: held for more than one year, classified as non-current assets.
A: Stocks: at fair value through profit or loss (FVTPL) or OCI (FVOCI). Bonds: at amortized cost, FVOCI, or FVTPL based on business model.
A: Recognized when the investee company declares dividends, provided the investor has a right to receive them.