all-inclusive approachA concept of income by which virtually all nonequity-based transactions and events are captured and reported in the income statement; the preferred approach for income theory
amortized cost methodThe approach mandated for held-to-maturity securities; investments are reported at their cost with any premium or discountamortized over the life of the investment
available-for-sale securitiesInvestments in debt that are neither "held-to-maturity" or "trading;" a default category that is accounted for at fair value with changes in value recognized in other comprehensive income
consolidationTo prepare financial reports for a parent and subsidiary company as a single economic unit
current operating approachA concept of income where income is limited to transactions related to central ongoing operations; not an acceptable approach for income theory
discount on bondsThe difference between face value and issue price of a bond, where the issue price is less; causes the effective yield to be higher than that stated
equity methodMethod to account for stock investment when significant influence is present; changes in equity of the investee are recognized by the investor on a pro rata basis
goodwillThe excess of the purchase price of an acquired company over the fair value of the identifiable net assets acquired
held-to-maturity investmentsInvestments purchased with intent to hold to maturity; usually investment in debt; accounted for by amortized cost method
investeeThe company in which another has an investment
issue priceThe amount a company receives in exchange for the initial issue of debt or other financial instrument
other comprehensive incomeAn account for changes in value of available for sale securities; not part of net income but is included in the broader concept of total comprehensive income
par value on bondsThe face or contract amount of a bond; the amount to be repaid at maturity along with any interest
premium on bondsThe difference between face value and issue price of a bond, where the issue price is more; causes the effective yield to be lower than that stated
significant influenceThe ability to sway management and decision making of another entity, but generally not enough to assert absolute control
straight-line methodA method for amortizing premiums and discounts on bonds; the premium or discount is spread uniformly over the life of the bond as an adjustment of interest
trading securitiesInvestments in debt acquired with the intent of generating profits by reselling the investment in the very near future; classified as current assets
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.Ok
