Interpreting Disclosures of Investment Securities

Amgen Inc. reports the following disclosure relating to its accumulated other comprehensive income.

Foreign Cash Available$-$

Currency Flow for$-$Sale

$ millions Translation Hedges Securities Other AOCI

Balance as of December $31,2017$ $$(794)$ $$(9)$ $$(216)$ $ $-$ $$(1,019)$

Cumulative effect of change in accounting

principle, net of tax $(14)(14)$

Foreign currency translation adjustments $(212)(212)$

Unrealized $($losses$)$ gains $92(834)(742)$

Reclassification adjustments to income $393548941$

Other $(3)(3)$

Income taxes $-(114)9-(105)$

Balance as of December $31,2018$ $$(1,006)$ $$362$ $$(507)$ $$(3)$ $$(1,154)$

a$.$ Amgen reports unrealized gains and losses on available$-$for$-$sale securities as part of AOCI. Which of the following types of investments could be included in this account? Select all that apply.

Investments with Unrealized Gains $($Losses$)$ in AOCI

i$.$ Bonds issued by US corporations. Answer

ii$.$ Common stock traded on US stock exchange. Answer

iii. Common stock traded on foreign stock exchange. Answer

iv$.$ Debt securities issued by a foreign government. Answer

v$.$ Municipal bonds. Answer

vi$.$ U$.$S$.$ Treasury bills. Answer

b$.$ Consider the securities held in the available$-$for$-$sale portfolio at December $31,2018.$ Identify each of the following statements as true or false.

Answer

i$.$ At December $31,2018,$ the fair value of the securities was $$507$ million less than their amortized cost.

Answer

ii$.$ At December $31,2018,$ the fair value of the securities was $$507$ million greater than their amortized cost.

Answer

iii. At December $31,2018,$ the fair value of the securities was $$507$ million lower than their value at December $31,2017.$

Answer

iv$.$ At December $31,2018,$ the fair value of the securities was $$291$ million lower than their value at December $31,2017.$

c$.$ Consider the securities held in the available$-$for$-$sale portfolio at December $31,2018.$ Identify each of the following statements as true or false in describing the change in the market value of those securities during the year.

Answer

i$.$ Decreased by $$507$ million.

Answer

ii$.$ Decreased by $$834$ million.

Answer

iii. Increased by $$834$ million.

Answer

iv$.$ Decreased by $$287$ million.

d$.$ Amgen increased AOCI by $$548$ million for reclassification adjustments to income. Identify each of the following statements as true or false in describing what this line item means.

Answer

i$.$ During $2018,$ Amgen sold available$-$for$-$sale securities and realized a loss of $$548$ million.

Answer

ii$.$ During $2018,$ Amgen sold available$-$for$-$sale securities and realized a gain of $$548$ million.

Answer

iii. During $2018,$ Amgen sold available$-$for$-$sale securities that had unrealized gains of $$548$ million at December $31,2017.$

Answer

iv$.$ During $2018,$ Amgen sold available$-$for$-$sale securities that had unrealized losses of $$548$ million at December $31,2017.$