Accounting Investments Discussion

Category: Business & Finance

Description

Mini-Case

Respond to the following prompts. You may use all available resources to complete this case – e.g., lecture slides, notes and the Accounting Standards Codification (ASC).

Use appropriate citations where relevant and according to your professional judgment. For questions requiring use of the codification, please cite the ASC down to the Paragraph. For example, (ASC 330-10-05-01). Ensure that you interpret the authoritative guidance you cite into ‘plain English’ as best you can. In other words, how would you explain the appropriate accounting treatment to a colleague, boss, or business partner who has a basic understanding of accounting? You may (and are encouraged to) use debits and credits or t-accounts to illustrate the accounting if appropriate.

For grading, I will focus primarily on the interpretation and communication of the content in the codification section(s). Avoid citing the textbook and do not expect that repeating what can be found in your textbook will earn you full credit.

Website for FASB Codification: http://www2.aaahq.org/ascLogin.cfm

Username – AAA51186 Password – KD8R7jj

Question

After working for an accounting firm for a number of years you decide to go work for a hedge fund as Assistant Controller. The hedge fund invests in a variety of marketable securities, including equity of other companies (typically the firm’s common stonk) and other companies’ publicly traded debt. The company also invests in derivative securities, in particular options, and sometimes engages in what is called “short selling”, wherein it borrows shares of stock from another company and sells it with the promise to return the shares of stock in the future with an additional fee or interest. The hedge fund has a large short interest in a particular company, GameStop, and the price changed rapidly shortly after you arrived.

For this prompt:

Provide short summaries of each of these investments (citing appropriately) and determine the correct accounting when the prices change rapidly, citing ASC where appropriate.


Note: you must write your own words and give me the paper with 0% plagiarism


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