RMK Investment

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Nama : Meta Ayu Kurniawati

Kelas : Matrikulasi
Jurusan : Magister Akuntansi

RINGKASAN MATERI KULIAH (RMK)
AKUNTANSI KEUANGAN
TOPIC: INVESTMENT

1. DEBT INVESTMENT
Debt investments are characterized by contractual payments on specified dates of
principal and interest on the principal amount outstanding. Companies measure debt
investment at amortized cost. Amortized cost is the initial recognition amount if the
investment minus repayments, plus or minus cumulative amortization and net of any
reduction for uncollectibility. Fair value is the amount for which an asset could be
exchanged between knowledgeable willing parties in an arms length transaction.

1.1 Debt Investment - Amortized Cost
Only debt investments can be measured at amortized cost. If it is company
strategy to hold this investment in order to receive these cash flow over the life
of the bond, it has a held for collection strategy and it will measure the
investment at amortized cost.

1.2 Debt Investment - Fair Value
In some cases, companies both manage and evaluate investment performance on
a fair value basis. In these situations, these investments are managed and
evaluated based on a documented risk management or investment strategy
based on fair value information. If companies frequently buy and sell these
investment to generate profits in short term differences in price, these debt
investments are often referred to as trading investments.

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1.3 Fair Value Option
In some situations, a company meets the criteria for accounting for a debt
investment at amortized cost, but it would rather account for the investment at
fair value, with all gains and losses related to changes in fair value reported in
income. The most common reason is to address a measurements or recognition
mismatch. To address this mismatch, companies have the option to report
most financial assets at fair value.

2. EQUITY INVESTMENT
An equity investment represents ownership interest, such as ordinary, preference or
other capital shares. The cost of equity investments is measured at the purchase price
of the security. The classification of such investment depends on the percentage of
the investee voting shares that is held by the investor.
a. Holdings of less than 20 percent (fair value method), investor gas passive
interest.
b. Holdings between 20 percent and 50 percent (equity method), investor has
significant influence.
c. Holdings of more than 50 percent (consolidated statements), invertor has
controlling interest.

2.1 Equity Investment at Fair Value
When an investor has an interest of less than 20 percent, it is presumed that the
investor has little or no influence over the investee. IFRS allows companies to
classify some equity investment as non-trading. Non-trading equity investment
are recorded at fair value on the statement of financial position, with unrealized
gains and losses reported in other comprehensive income.

2.2 Equity Method
An investor corporation may hold an interest of less than 50 percent in an
investee corporation and thus not possess legal control. However, an investment
in voting shares of less than 50 percent can still give an investor the ability to
exercise significant influence over the operating and financial policies of an
investee. To achieve a reasonable degree of uniformity in application of the
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significant influence criterion, the profession concluded that an investment of
20 percent or more of the voting shares of an investee should lead to a
presumption that in the absence of evidence to the contrary, an investor has the
ability to exercise significant influence over an investee. In instances of
significant influence the investor must account for the investment using the
equity method.

2.3 Consolidation
When one corporation acquires a voting interest of more than 50 percent in
another corporation, it is said to have a controlling interest, in such a
relationship, the investor corporation is referred to as the parent and the investee
corporation as the subsidiary. When the parent treats the subsidiary as an
investment, the parent generally prepare consolidated financial statement.
Whether or not consolidated financial statements are prepared the parent
company generally accounts for the investment in the subsidiary using the equity
method.

3. OTHER REPORTING ISSUES
3.1 Impairment of Value
A company should evaluate every held for collection investment, at each
reporting date, to determine if it has suffered impairment a loss in value such
that the fair value of the investment is below its carrying value. If the company
determines that an investment is impaired, it writes down the amortized cost
basis of the individual security to reflect this loss in value.

3.2 Transfers between Categories
Transferring an investment from one classification to another should occur only
when the business model for managing the investment changes. The IASB
expects such change to be rare.

3.3 Fair Value Controversy
The reporting of investment is controversial. Some favor the present approach
which reflect a mixed attribute model based on a companys business model for
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managing the investment and the type of security. Some of the mojor unresolved
issues as follows:
a. Measurement based on business model
b. Gains trading
c. Liabilities not fairly valued
d. Fair value final comment

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Nama : Meta Ayu Kurniawati

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