## AS 13: The Three-Column Investment Ledger
### Why Three Columns?
A debt investment account is maintained with three separate money columns to keep economically distinct flows from mixing:
| Column | What It Tracks | Year-End Treatment |
|---|---|---|
| NV (Nominal/Face Value) | Face value of securities held | Carried forward in Balance c/d |
| Interest | All interest flows (paid on purchase, received on due date, year-end accrual) | Net balance transferred to P&L |
| Cost (Amount) | Ex-interest investment cost at FIFO | Carried forward in Balance c/d |
### Debit Side (To…) — Standard Entries
| Event | NV Col | Int Col | Cost Col |
|---|---|---|---|
| Balance b/d (opening) | Opening NV | Accrued Int b/d | Opening cost |
| Purchase (cum-int) | NV of units bought | Accrued Int paid | Ex-int price |
| Purchase (ex-int) | NV of units bought | — | Ex-int price |
| Profit on sale | — | — | Profit |
| Transfer to P&L (year-end interest) | — | Net interest income | — |
### Credit Side (By…) — Standard Entries
| Event | NV Col | Int Col | Cost Col |
|---|---|---|---|
| Interest received/due | — | Amount received | — |
| Sale (ex-int proceeds) | NV sold | Accrued Int received | FIFO cost |
| Loss on sale | — | — | Loss |
| Balance c/d (year-end accrued int) | — | Year-end accrual | — |
| Balance c/d (closing) | Closing NV | — | Closing cost |
### How the Interest Column Works
The Interest column is a mini-ledger within the ledger:
- Debit side accumulates: opening accrued interest + interest paid on purchases
- Credit side accumulates: interest received on due dates + interest on sale proceeds + year-end accrual
- The net credit balance = interest income for the year → transferred to P&L
### Ledger Balancing at Year-End
```
1. Compute year-end accrual → enter as By Balance c/d (Interest col)
2. Total both sides of Interest column
3. Difference (net income) → Dr Investment A/c (Int col), Cr P&L A/c
4. Balance NV and Cost columns normally → carry forward as Balance b/d
```