Debt/Equity Securities

Question 1

How are investments in marketable securities classified on the date of transfer when they transfer from trading securities to available for sale securities?

Answer 1

Transfer is always recorded at fair market value on the date of transfer.

Question 2

How are unrealized gains and losses reported for available for sale securities? (When fair value option is elected)

Answer 2

Unrealized gains and losses are reported as a component of income from continuing operations.

Question 3

How are unrealized gains and losses reported for trading securities?

Answer 3

Unrealized gains and losses are reported in income

Question 4

How are unrealized gains and losses reported for available for sale securities? (absent a fair value election)

Answer 4

Unrealized gains and losses are reported in other comprehensive income.

Question 5

Noncurrent investment in marketable securities, what is net unrealized loss?

Answer 5

Net unrealized loss to be reported is equal to the allowance for decline in value. (If this is provided)

Question 6

Trading securities should be reported at what?

Answer 6

Fair value

Question 7

How are bonds purchased as a short term investment treated?

Answer 7

It will be classified as a trading security and reported at its market value on the date of the balance sheet.

Question 8

Held to maturity investments are reported at what?

Answer 8

Originally recorded at cost with any discount or premium being amortized as an adjustment to income.
Therefore, reported at Amortized Cost