Video: Financial Investments at Fair Value and Amortized Cost Overview and Objectives

In this lesson, navigate through the intricacies of reporting financial investments with Nick Palazzolo, CPA, as he breaks down the criteria for investments to be reported at fair value versus amortized cost. Delve into the details of calculating the carrying amount of such investments and constructing the appropriate journal entries. Nick makes sure to tackle the recognition of gains, losses, and investment income in net income or Other Comprehensive Income (OCI), always with an eye toward practical journal entry preparation. He wraps up by examining how to measure and report impairment losses on investments at fair value, simplifying complex concepts to help you quickly grasp and apply these principles for those easy, "free point" exam questions.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Welcome to financial investments at Fair Value and Amortized Cost. I'm your host, Nick. Welcome back. So here we go. We've got some questions on more of the financial side.

Financial instruments. Financial investments got debt and equity. You have money, you want to invest it. Well, how do you report these investments once you purchase them? Let's take a look with our learning objectives.

What do we have? Well, we want to identify investments that are eligible or required to be reported at fair value. To be reported at fair value, we'll see this old chart. Lots to memorize, nothing too crazy. Lots of free points. Once you get the chart memorized, we want to calculate the carrying amount of investments measured at fair value and prepare journal entries, excluding impairment. We want to calculate gains and losses to be recognized in net income or OCI for investments measured at fair value and present journal entries. We want to calculate investment income to be recognized in net income for investments measured at fair value and prepare journal entries. Lastly, we want to measure impairment losses to be recognized in applicable investments reported at fair value in the financial statements. Lots of great things to see here. Lots of memories. Which is a good thing, right? Because you memorize something, you got it under wraps, right? You don't have to think about it. You can just answer these questions. Boom, boom. Quick, easy, free points on the exam. Let's get into it.

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Investments & Long-term Debt

Module: 3 Concepts, 34 Videos

Financial Investments at Fair Value and Amortized Cost Overview and Objectives

1:31

Investment Categories

2:23

Equity Investment Categories

2:31

Debt Investment Categories