CFA CFA Level 2 Intercorporate investments

Intercorporate investments

  • Author
    Posts
    • akansha_singh83
      Participant
      Up
      9
      Down

      Hi All
      The question may seem naive yet it is bothering me and so I thought I will seek out your opinion. In L1 the curriculum said that the issuer of long term debt carries the debt in his balance sheet initially at face value and then at amortized cost. In L2 when I am reading about inter corporate investments, the curriculum is saying the same thing about investment in held to maturity securities (initially held at face value and then at amortized cost using the effective interest rate method). Does this mean that the value reflected in the books of the bond issuer and the bond holder( if he intends to hold it to maturity) will be the same ? (naturally this would have to be proportionate to the amount of the bond held by the individual bond holder compared to the total debt issued by the bond issuer)
      Your opinions are more than welcome!!
      Thanks!!

    • clangerh
      Participant
      Up
      0
      Down

      Relatively speaking, yes, the values would be the same. I believe you are spot-on.

    • Stuj79
      Participant
      Up
      3
      Down

      I would believe that to be so – As you mentioned, IF the bond buyer intends to hold it to maturity (and not held for trading etc) then the relative values recorded on the balance sheet would be the same.

    • mohamadba91
      Participant
      Up
      5
      Down

      yes i think so

Viewing 3 reply threads
  • You must be logged in to reply to this topic.