Business, 03.04.2021 02:30 Rusven

You learned that some companies use excess cash to buy long-term investments (assets on the balance sheet). The investments may be fixed income securities (debt instruments), equity securities (ownership instruments) or derivative securities (hedges or speculation). You learned that how the investments are recorded on the financial statements is dependent on the facts of each investment purchase. Debt securities may be classified as held to maturity, available for sale or trading. Equity securities are recorded on the balance sheet based on the percentage of ownership. You further leamed that the original cost of some of those investments may be required to be adjusted to fair value in subsequent periods. Required: Wasting Cash, Inc, purchased the investments described in items through 3. Using the attached template, show how each investment would impact/change Wasting Cash, Inc.'s financial statement (statement of cash flows, regular income statement and balance sheet), Indicate cach account name and the related S increase (decrease) for that account for each financial statement that the transaction effects (round all answers to the nearest dollar),
1. Wasting Cash, Inc. has significant excess cash and purchased an Apple 4-year, 2.5% Coupon, S150,000 par value bond. The Apple bond pays interest annually and was purchased when the YTM (bond market rate of interest) was 3.75% Wasting Cash, Inc. paid $143,154 for the Apple bond on January 1 of this year and intends to hold the bond until maturity. Wasting Cash, Inc.'s year end is December 31. At December 31 of this year, the fair value of the Apple bond was $149,500. How does this transaction affect Wasting Cash, Inc.'s financial statement in year one of the purchase (use attached template)? (Hint: you should create a bond amortization schedule for the Apple Bond to correctly determine the financial statement amounts.]

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