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Handbook: Investments

Handbooks | February 2024

Latest edition: Our guide to accounting for investments in debt and equity securities and the fair value option.

Using Q&As and examples, our in-depth guide explains the accounting for investments in debt and equity securities. ASC 320 applies to investments in debt securities, and ASC 321 applies to investments in equity securities and other ownership interests in an entity.

This February 2024 edition adds guidance on the fair value option for financial instruments and other interpretations related to investments in debt and equity securities based on frequent questions we experience in practice. 


  • Companies that hold investments in debt and equity securities  
  • Companies that hold financial instruments in the scope of ASC 825-10

Relevant dates

  • Effective immediately

Perspectives on investment accounting and the fair value option

Investment accounting is how we refer to the accounting for debt and equity securities that don’t fall under other accounting models, such as the equity method or consolidation. These remaining investments typically give the investor limited (if any) influence over the investee.  

The first comprehensive accounting and reporting guidance on investments in debt and equity securities was issued in 1993. Nearly 30 years later, some of those requirements and concepts are still present – including the core principles for classification and accounting for debt securities. But there have been several changes (especially for equity securities) as well as challenges in applying the guidance to new facts and circumstances and new types of investments.

This updated publication also addresses the application of the fair value option. The fair value option can be elected for a wide range of financial assets and liabilities, including investments in debt and equity securities. It allows these instruments to be measured at fair value on a recurring basis.

In bringing this guidance together, we aim to help you effectively and efficiently identify the guidance that applies to different types of investments and understand the related accounting requirements. We walk you through available accounting options so that you can make the choice that is right for you. 

Report contents

  • Scope and scope exceptions
  • Accounting for investments in debt securities
  • Classification of debt securities
  • Accounting for investments in equity securities
  • Fair value option

Download the document:


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Executive summary

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Mark Northan
Partner, Dept. of Professional Practice, KPMG US
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Managing Director, Dept. of Professional Practice, KPMG US

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