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Subject 1. Basic Corporate Investment Categories PDF Download
Intercorporate investments refer to the ownership of the securities (debt or equity) of one firm by another firm. These investments may be made to temporarily invest excess funds or for strategic purposes such as alliances (R&D joint ventures, sharing of production facilities, and vertical or horizontal integration), or acquisitions (gaining control of another company in a parent-subsidiary relationship).

The problems of accounting for intercorporate investments involve classification (current or non-current), measurement (valuation) and disclosure (accounting methods used). All methods for accounting for investments in other securities recognize dividends and interests as income in the year they are earned.

Learning Outcome Statements

describe the classification, measurement, and disclosure under International Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments in associates, 3) joint ventures, 4) business combinations, and 5) special purpose and variable interest entities;

distinguish between IFRS and US GAAP in their classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;

analyze how different methods used to account for intercorporate investments affect financial statements and ratios.

CFA® 2023 Level II Curriculum, Volume 2, Module 11

User Contributed Comments 3

User Comment
quanttrader damn, I don't remember these reporting category methods at all
birdperson this chart is everything.
diptaneal Is Consolidate Method same as acquisition method in case of Business Combinations?
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

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