IFA45 – Debt Investments: Available for Sale (FVOCI) – Intermediate Accounting

Download the Workbook: http://www.tonybell.com Unlock 100+ Members Accounting Tutorials: https://www.youtube.com/channel/UCNFClg6mzfZ5ixpuH9c7f1A/join In This Video: We work through Problem 9-3A, focusing on the complex accounting treatment for Debt Investments classified as Available for Sale, or Fair Value Through Other Comprehensive Income (FVOCI). Using a scenario where Falkland Corp. purchases bonds with the dual intent of collecting interest and potentially selling them, we start by building a two-year amortization schedule using the effective interest method. We record the initial purchase and the December 31 interest payment, followed by the critical year-end fair value adjustment that flows through OCI rather than Net Income. Finally, we tackle the mid-year sale on May 31, walking step-by-step through accruing the interest, updating the fair value, and properly "recycling" the accumulated OCI into a realized gain or loss upon disposal. Module Overview (IFA42–IFA47): This module explores the accounting treatment for Investments. We will dive into the specific rules for debt securities (including Amortized Cost, Fair Value Through Net Income, and Fair Value Through Other Comprehensive Income), as well as the different levels of influence and corresponding accounting methods for equity securities (Fair Value, the Equity Method, and Consolidation).