Flashcards in Investments Deck (11):
How is interest earned on held-to-maturity investments reported in the income statement?
As an other income item in the income statement
List the criteria for held-for-trading securities.
1) Applied to investments in debt and equity
2) Investor buys for the purpose of selling in the near term.
Where are unrealized holding gains and losses on investments held-for-trading reported?
In income (income statement) as part of income from continuing operations
List the criteria for a held-to-maturity classification.
1) Debt security
2) Investor has intent to hold to maturity
3) Investor has ability to hold to maturity
Where are held-to-maturity investments reported on the statement of cash flows?
What amounts should be included in the initial recording of a held-to-maturity investment?
1) Purchase price of security
2) Directly related cost of acquisition (broker fees, transfer fee, etc)
3) Accrued interest, if any, is not included in the cost of the investment
How are AFS reported in the balance sheet?
At FV as either current or non current.
How do we account for the transfer of an investment in trading to HTM or AFS?
1) Credit trading @ recorded FV
2) Debit HTM/AFS @ current FV
3) Recognize unrealized holding gain/loss in net income
How do we account for the transfer of an investment from HTM to AFS?
1) Credit HTM at unamortized cost
2) Debit AFS @ FV
3) Unrealized gain or loss to OCI
How to account for the transfer from HTM to trading?
1) CR: HTM @ unamortized cost
2) DR: trading @ FV
3) recognize unrealized gain/loss in Net Income