What is the difference in the way bonds are reported for profit and not for profit organization?© BrainMass Inc. brainmass.com June 4, 2020, 3:45 am ad1c9bdddf
In a for-profit entity, bonds are initially reported at cost. Currently, GAAP requires that the equity method be used for for-profit accounting. Under the equity method, the entry is made based on the actual price paid for the bond. This is the amount that carries over onto the balance sheet, and subsequently shows the bond as an asset. Based on the type of bond, the gain or loss from the bond is then ...
This solution explains the differences in bond reporting between a non-profit and a for-profit organization. Additional resources/references are also provided for student expansion.