In 2019, Amazon's short-term investment account had a value of $18 930 billion. However, in 2015, their short-term investment account had a balance of $3,920 billion. The reason behind the over 382.91% increase over the past three years could be attributed to increased invention and innovation by the company. Besides, the company improved its customer service efficiency. Companies will often do this to earn a higher interest rate rather than placing the cash into a regular savings account (Segal, 2020). During the three trading periods, the company didn't make any long-term investment. The short-term investments at Amazon considerably increased due to the improved revenues during the period. However, the company acquired property and equipment under capital leases and build-to-suit leases.
Amazon abides by the FASB codifications by having the financial statements topically organized into the various sections. In the Amazon financial statements, it highlights multiple risk factors in the company's operations, the unresolved staff comments, the pending legal proceedings, and the Mine safety disclosures. This enables the investors to make informed investment decisions and other issues related to the equities' issuer purchase. Besides, Amazon's financial statements provide additional information, including a report of an independent Registered Public Accounting firm (Ernst & Young LLP) and other consolidated financial statements. Finally, the statements consist of descriptions of the business and the accounting policies used in financial reporting, including consolidation and earnings per share principles. FASB Codification 323-10-25 states that an investor shall recognize an investment in an investee's stock as an asset.
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Given that Amazon has an equity-method investment account visible under assets, it can be concluded Amazon complies with FASB Codification 323-10-25. Generally, the financial statements are based on the FASB codification guidelines, and it is easier to locate and understand the statements at various GAAP hierarchies. It is easier to apply the information from the financial statements.
Reference
Segal, T. (2020, March 31). Short-Term Investments. Retrieved from https://www.investopedia.com/terms/s/shorterminvestments.asp#:~:text=Many short-term investments are,government bonds and Treasury bills.
