Debt/Equity Securities

Question 1

How are trading securities reported on the balance sheet? How are unrealized holding gains/losses reported? Are dividends income?

Answer 1

Reported at fair value. Unrealized gains and losses are included in earnings (net income) in the period they occur. Dividends ARE income.

Question 2

How are available for sale securities reported on the balance sheet? How are unrealized holding gains/losses reported? Are dividends income?

Answer 2

Reported at fair value, can either be current or non-current. Unrealized gains and losses are excluded from income- instead, they are reported in OCI. If the loss is permanent, it is THEN recognized in income. Dividends ARE income.

Question 3

How are held to maturity securities reported on the balance sheet? How are unrealized holding gains/losses reported? Are dividends income?

Answer 3

Reported at amortized cost and grouped with non-current assets on the balance sheet. Unrealized gains and losses are excluded from earnings- instead, they are reported as OCI (unless the decline is permanent or the fair value option is selected). No dividends on debt.

Question 4

Are trading securities debt or equity securities?

Answer 4

Debt or equity- they can be both.

Question 5

Are available for sale securities debt or equity securities?

Answer 5

Debt or equity- they can be both.

Question 6

Are held to maturity securities debt or equity securities?

Answer 6

DEBT only. HTM securities CANNOT be equity securities.

Question 7

What are the levels and percentages of influence?

Answer 7

0%-20%: Nominal/no influence
21%-50%: Significant influence
Greater than 51%: Control