(Equity Securities) The Financial Accounting Standards Board issued its Statement No. 115 to clarify accounting methods and...
Question:
(Equity Securities) The Financial Accounting Standards Board issued its Statement No. 115 to clarify accounting methods and procedures with respect to certain debt and all equity securities. An important part of the statement concerns the distinction between held-to-maturity, available-for-sale, and trading securities.
Instructions
(a) Why does a company maintain an investment portfolio of held-to-maturity, available-for-sale, and trading securities?
(b) What factors should be considered in determining whether investments in securities should be classified as held-to-maturity, available-for-sale, and trading? How do these factors affect the accounting treatment for unrealized losses?
Step by Step Answer:
Intermediate Accounting 2007 FASB Update Volume 2
ISBN: 9780470128763
12th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield