quity securities can be classified as only Trading Securities & AFS. Why not HtM? How to account for certain activities involving the Fair Market Value method of equity securities: Purchase Mark to market Unrealized Gains/Losses recorded in Net Income At Cost Follow my three steps when solving equity method problems to avoid mistakes: 1) Show the balance sheet presentation of the security (same as for debt securities) 2) Create T-Accounts for the FVA accounts. Separate TS from AFS, but no need to separate individual investments. 3) Use the plug in the T-Account in the Mark-to-Market (MtM) entry Trading Securities AFS Ex. MidFirst Bank had no investments on their balance sheet at the beginning of 2015. The company adjusts FVA only at year-end [the book calls this method (1)]. During 2015, the company bought stocks Apple, Boeing, CVS and Disney and classified them accordingly. The FMV at 12/31/15 was also determined and recorded below: Receive Dividends Dividend Revenue in Net Income Apple 100 shares Boeing 200 shares C CVS 300 shares Disney 100 shares Cost 3000 4000 9000 8000 Fair Market Value 3100 3800 9500 8700 A) What is the amount of any unrealized gains or losses in 2015? B) What is the impact of the transactions that occurred in 2015 on Net Income? Sell Remove at cost and record realized Gains/Losses in Net Income if needed What is the impact of the transactions that occurred in 2015 on SHE? 19

quity securities can be dassified as only Trading Securities \& AFS. Why not HtM? Follow my three steps when solving equity method problems to avold mistakes: 1) Show the balance sheet presentation of the security (same as for debtsecurities) 2) Create T-Accounts for the FVA accounts. Separate TS from AFS, But no need to separate individual investments. 3) Use the plug in the T-Account in the Mark-to-Market (MtM) entry Ex. MidFirst Bank had no Investments on their balance sheet at the beginning of 2015. The company adjusts RVA only at yearend [the book calls this m u (1)], During 2015, the company bought stocks Apple, Bocine cVs and Disney and clasuified them accordingly. The FMV at 12/31/15 was also determined and fecorded below: A) What is the amount of any unrealized gains or losses in 2015 ? 8) What is the impact of the transuct ons that oceurced in 2015 on Net income? 19