I have invested in few stocks of different companies and is planning to keep them for more than 5 years. I have to make my balance sheet. How will I record them and what will be the second effect. Kindly explain in detail. Suppose in my first year B/S only capital (liability side) and FA, Cash and Bank were there (on asset side). Now in the second year I invested in share market. How will be my second year B/S? Kindly explain. Thanks
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Quick Summary
This discussion explains how to record stock investments on your balance sheet. It clarifies that investments should be added as an asset, valued at fair market value according to AS 13. The thread also details the accounting entries for initial investment, cash inflows, carrying value adjustments, and the disposal of investments, including associated expenses and profits or losses.
HOW MUCH YOU HAVE INVESTED IN STOCK THAAT WILL BE YOUR CAPITAL.
IF YOU HAVE DEMATERIALISED THE STOCKS THAT IS YOUR Investment recorded at fair market value as per accounting conventions. Any dematerialized stocks sold will be shown under current assets under BANK. IF ANY EXPENSES INCURRED FOR DEMATERIALIZATION OF SHARES AND OF CONSIDERABLE AMOUNT WILL BE SHOWN AS PRELIMINARY EXPENSES. I HOPE THE BALANCES SHETT ASSET SIDE IS MORE OR LESS READY. PLS REVERT BACK IF U HAVE FURTHER QUERIES. Now ,
Fixed asset a/c includes brokerage, fee and duty in cost of share issue or consideration paid
Fixed asset a/c
Share Capital / Bank a/c
next
Bank a/c
To Income a/c when there is cash inflow from investments
then, assuming you have fixed investments, the carrying value reduction is charged to income statement and it isn’t reversed when the carrying value rises next year.
Loss on investment
To Fixed investment a/c- reduction in carrying amount
&
Fixed investment a/c
To Gain on investment a/c
or
Loss on investment
To Gain on investment To the extent of increase in fixed investments
Finally while disposing the investment
disposal expenses a/c
Bank a/c a/c
To Disposal proceeds a/c
To Bank a/c
To FIxed investment a/c
incase of profit on disoposal
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