Investments Flashcards
How are trading securities recorded?
On the balance sheet at Fair Value- as current assets
Unrealized gains/losses are recorded on the Income Statement (g/l in earnings)
If they are reclassified as held-to-maturity or available-for-sale- there is no effect upon transfer.
How are Available-For-Sale securities recorded?
On the balance sheet- at fair value as either current or non-current assets.
Unrealized gains/losses are included in OCI (Other Comprehensive Income)
If reclassified as held-to-maturity- 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 recorded?
On the balance sheet at amortized cost as current or non-current assets.
Unrealized gains or losses are not applicable.
If reclassified as available-for-sale- unrealized G/L go to Stockholder’s Equity
If reclassified as trading securities- unrealized G/L recognized in current period
HTM securities are…
Intent & ability to hold (debt)
Trading securities are…
Bought & held principally to sell in the near term (debt & equity)
Trade FROM TS - no g/l recognized (already recognized)
Trade TO TS - unreal g/l recognized in earnings immediately
