SFAS No. 115 requires companies to assign their portfolio of investment securities into (1) trading securities, (2)

Question:

SFAS No. 115 requires companies to assign their portfolio of investment securities into (1) trading securities, (2) securities available for sale, and (3) held-to-maturity securities.

Required:

a. Define each of these categories of securities and discuss the accounting treatment for each category.

b. Discuss how companies are required to assign each category of securities into its current and noncurrent portions.

c. Some individuals maintain that the only proper accounting treatment for all marketable securities is current value. Others maintain that this treat¬ ment might allow companies to "manage earnings." Discuss the argu¬ ments for each position.

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