question archive Corporations frequently invest in securities issued by other corporations
Corporations frequently invest in securities issued by other corporations
Subject:EconomicsPrice: Bought3
Corporations frequently invest in securities issued by other corporations. Some investments are acquired to secure a favorable business relationship with another company On the other hand, others are intended only to earn an investment return from the dividends or interest the securities pay or from increases in the market prices of the securities--the same motivations that might cause you to invest in stocks, bonds, or other securities. This diversity in investment objectives means no single accounting method is adequate to report every investment Merck & Co., Inc., Invests in securities of other companies Access Merck's 2016 10-K (which includes financial statements) using EDGAR at www.sec.gov Note Merck's 2016 financial statements were issued prior to the effective date of ASU 2016-01, so do not be surprised by the fact the Merck includes equity investments among its available for sale investments. Required: 1. a. What is the amount AFS Investment securities reported in the balance sheet? b. In which current ancurrent asset categories are AFS Investments reported by Merck? c. Is there an amount you can't find in the balance sheet but that you know must be there? 2. a. How are unrealized gains or losses on AFS Investments reported, in net income or OCI? b. What about realized gains or losses on AFS Investments? 3. Are any investments reported by the equity method? 4. What amounts from equity method investments are reported in the 2016 income statement? 5. Are cash flow effects of investments reflected in the company's statement of cash flows? $ 20,179 million 5 11,416 million 1- a. 1- b. 1- b. 1- c. Amount listed as investments in non-current assets Merck's 2016 balance sheet list as investments in non-current assets Amount listed in short-term investments Amount left as unidentified s 7,8263 million $ 963 million Other Comprehensive Income 2- a. 2- b. AFS investments rep ed unrealized gain or losses in AFS investments repo realized gain or losses in Net income Yes $ 88 OOO million 3. 4. Are any investments reported by the equity method? Amounts from equity method reported in 2016 income statement Are cash flow effects of investments reflected in the company's statement of cash flows?
