exercises and problems week six xacc 291 494627

568 Chapter Investments After studying this chapter, you should be able to: 1 Discuss why corporations invest in debt and stock securities. 2 Explain the accounting for debt investments. 3 Explain the accounting for stock investments. 4 Describe the use of consolidated financial statements. 5 Indicate how debt and stock investments are reported in financial statements. 6 Distinguish between short-term and long-term investments. S T U D Y O B J E C T I V E S Feature Story ?The Navigator 12“IS THERE ANYTHING ELSE WE CAN BUY?” In a rapidly changing world you must change rapidly or suffer the consequences. In business, change requires investment. A case in point is found in the entertainment industry. Technology is bringing about innovations so quickly that it is nearly impossible to guess which technologies will last and which will soon fade away. For example, will both satellite TV and cable TV survive, or will just one succeed, or will both be replaced by something else? Or consider the publishing industry. Will paper newspapers and magazines be replaced by online news via the World Wide Web? If you are a publisher, you have to make your best guess about what the future holds and invest accordingly. Time Warner, Inc. (www.timewarner.com) lives at the center of this arena. It is not an environment for the timid, and Time Warner’s philosophy is anything Scan Study Objectives ¦ Read Feature Story ¦ Read Preview ¦ Read text and answer p. 573 ¦ p. 578 ¦ p. 581 ¦ p. 584 ¦ Work Comprehensive p. 587 ¦ Review Summary of Study Objectives ¦ Answer Self-Study Questions ¦ Complete Assignments ¦ ?The Navigator Do it! Do it! JWCL165_c12_568-611.qxd 8/12/09 8:29 AM Page 568 569 but that. It might be characterized as, “If we can’t beat you, we will buy you.” Its mantra is “invest, invest, invest.” A list of Time Warner’s holdings gives an idea of its reach. Magazines: People, Time, Life, Sports Illustrated, and Fortune. Book publishers: Time-Life Books, Bookof-the-Month Club,…