Finland Corporation holds a portfolio of debt and equity investments. Although some of the securities in the portfolio have declined in value, the total value of the portfolio is greater than its total cost. Finn Berge, Finland Corporation's president, has decided to classify all securities in the portfolio that have decreased in value as available-for-sale (the stock investments) or as held-to-maturity (the debt investments). He will classify all securities that have increased in value as trading securities.

\section*{Instructions}

In groups of four or five discuss these issues:

(a) What impact will this classification approach have on Finland Corporation's reported results?

(b) Is this approach appropriate for classifying these securities?

(c) What are the implications of this approach for subsequent years?