Investments

Question 1

How are Available-For-Sale securities recorded on the Balance Sheet?

Answer 1

“At Fair value as either Current or Non-current assets.”

Question 2

How are Available-For-Sale security Unrealized G/L treated?

Answer 2

“Included in OCI (Other Comprehensive Income)”

Question 3

How are Unrealized G/L for Available-For-Sale securities that are reclassified to Held-to-Maturity or Trading Securities treated?

Answer 3

“HTM - Stockholder’s Equity

/ Trading Securities - Current Period.”

Question 4

How are Held-to-Maturity securities recorded on the Balance Sheet?

Answer 4

“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”

Question 5

How are Held-to-Maturity securities Unrealized G/L treated?

Answer 5

“Trick question - Unrealized gains or losses are not applicable because they are HTM”

Question 6

How are Trading Securities recorded on the Balance Sheet?

Answer 6

“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.”

Question 7

How are Trading Securities Unrealized G/L treated?

Answer 7

“Recorded on the Income Statement

If they are reclassified as HTM or AFS - there is no effect upon transfer.”