Is the "Cost Method" the same as "Held to Maturity"?

CFA Level II
#1

If not, whats the difference?

#2

Cost - will not mark to market for analysis purposes or accounting purposes (e.g. private shares) Held to maturity - will mark to market for analysis purposes but not accounting purposes (e.g. bonds)

#3

Is this right? I would think that a company that has control needs to consolidate? According to GAAP, two scenarios that require the use of the equity method. The first scenario occurs when a company acquires a position in another company that represents 20% to 50% ownership. The second is a situation in which each party owns a 50% stake and share control of the company.

#4

I dont think so. If it’s 50% or above you consolidate under US (international allows for proportional or consolidate when its at teh brink of 50%). UNLESS you own 50% of it but you have no significant INFLUENCE i guess.

#5

its the same… when u have a fixed income investment that is held to maturity it is recorded at cost… however it needs to be the amortised.

#6

u have to understand that the cost method is only a method… held to maturity is an investment instrument. held to maturity are recorded at the cost method in B/S and amortised Available for sale is recorded at cost method innet income however uses the amrket method on balance sheet trading uses market method for b/s and income statement

#7

^^ agree with ahmad

#8

I rethought my question. I think it is right, because they are using the word share and control 50%, which means joint venture. According to GAAP, two scenarios that require the use of the equity method. The first scenario occurs when a company acquires a position in another company that represents 20% to 50% ownership. The second is a situation in which each party owns a 50% stake and share control of the company.