Investments Flashcards
How are Available-For-Sale securities recorded on the Balance Sheet?
At Fair value as either Current or Non-current assets. Normally current
How are Available-For-Sale security Unrealized G/L treated?
Included in OCI (Other Comprehensive Income)
How are Unrealized G/L for Available-For-Sale securities that are reclassified to Held-to-Maturity or Trading Securities treated?
HTM - Stockholder’s Equity
/ Trading Securities - Current Period.
How are Held-to-Maturity securities recorded on the Balance Sheet?
Amortized cost as Current or Non-current assets.
If reclassified as AFS - Unrealized G/L go to Stockholder’s Equity
If reclassified as Trading Securities - Unrealized G/L recognized in Current Period
How are Held-to-Maturity securities Unrealized G/L treated?
Trick question - Unrealized gains or losses are not applicable because they are HTM
How are Trading Securities recorded on the Balance Sheet?
At Fair Value as a Current Asset
Unrealized gains/losses are recorded on the Income Statement
If they are reclassified as held-to-maturity or available-for-sale- there is no effect upon transfer.
How are Trading Securities Unrealized G/L treated?
Recorded on the Income Statement
If they are reclassified as HTM or AFS - there is no effect upon transfer.
Unrealized Gain and Losses for trading Securities are included in…
Earnings (IDA)
Unrealized gain pr loss on trading securities are shown in the income statement
What is the journal entry to record loss from trading securities on the income statement
Unrealized loss on trading securities
valuation account (FV adjustment)Unrealized Gains and Losses on Available for Sale Securities (including those classified as current assets are reported in:
Other comprehensive Income (OCI)
“PUFER”
what is the journal entry to record unrealized loss reported in other comprehensive income:
Unrealized loss on available for sale securites
Valuation account (FV adjustment)Where are realized gains and losses from the sale of a security recognized?
On the income statement
When are realized gains and losses from a security recognized?
When securities are sold or Available for sale security is deemed to be Impaired
On the income Statement
What do you value HTM securities at?
Amortized costs
If you are reclassifying a trading security to a available for sale security what happens to unrealized holdings gain or loss?
Unrealized holding gain or loss at date of transfer have already been recognized in earnings and can not be reversed
If you are reclassifying a securities to a trading security when and where should you recognized unrealized holding?
Unrealized holding gains and losses at the date of transfer should be recognized immediately in earnings.
If you are transferring a HTM debt security to Available for sale security where should unrealized holding gain or loss be recognized?
unrealized holding gain or loss at the date of transfer should be reported in OCI
If a available for sale security is reclassified as a held to maturity security what should happen to unrealized holding gain or loss?
should be amortized over remaining life of security as an adjustment of yield
Unrealized holding Gain or loss is already reported in OCI at this point
What happens if there is a permanent impairment loss on an available for sale or HTM securities
if there is an impairment loss the securities is written down to FV and that is the new cost basis
The amount of write down is a realized loss and included in earnings (IS)
What does a sale of security from any category result in?
Sale of security results in a realized gain or loss reported on the income statement for the period
What do you do with a valuation account when a security is sold?
Remove it
Realized gain or loss for selling a trading security is computed as?
Trading security realized gain=selling price-adjusted cost(original cost +/- unrealized gains/losses previously recognized on IS)
Realized gain or loss for selling an available for sale security is computed as?
Realized gain=selling price-original cost of security
any unrealized gain or losses in accumulated OCI must be reversed at the sale of securities
What is the JE to record a sale of a trading security?
Cash
Trading security
Realized gain on training security (IDA)
