Module 16 Flashcards
(33 cards)
What is the definition of a Trading security?
A debt or equity security bought and held principally for the purose of selling them in the near term?
How is a trading security recorded on the balance Sheet?
It is reported at fair value
How are unrealized holding gains and losses reported on the income statement for Trading securities?
They are included in earnings in the period in which they occur
How are realized holding gains and losses reported in income for Trading Securities?
Realized gains and losses not allready recognized as unrealized components are recognized
What section of the statement of cash flows do trading secutities appear?
Operating or Investing activities
What is the definition of an Available for Sale Security?
They are debt or equity securities not classified as trading or held-to-maturity?
How are available for sale securities recorded on the balance sheet?
They are reported at fair value classified as current or non-current.
How are unrealized holding gains and losses reported on the income statement for Available for sale securities?
Unrealized gains and losses for a period are excluded from earnings. And reported as other comprehensive income.
How are realized holding gains and losses reported in income for Available for Sale Securities?
Relized gains and losses are recognized in income
What section of the statement of cash flows do available for sale securities appear?
Investing activities
Temporary Losses on Available for Sale Securities are not recognized as loss?
TRUE
What is the definition of a held to maturity security?
Debt securities that the organizaiton has the positive intent and ability to hold to the maturity date.
How are held-to-maturity secutiyies recorded on the balance sheet?
They are reported at amortized cost and may be classified as current or noncurrent
How are unrealized holding gains and losses reported on the income statement for held to maturity securities?
They are excluded from earnings (unless decline is “other than temporary”)
How are realized gains and losses reported in the income statement for Held to maturity Securities?
Realized gains and losses are recognized in accordance with amortized cost method.
What section of the statement of cash flows do held to maturity securities appear?
Investing activities
What categories of investments are defined as ownership of less than 20%?
Trading securities, and available-for-sale.
How are investment of 20-50% of the shares of stock treated?
Using the Equity Method
How are investments of 50% or greater treated?
Using the Consolidated financial statements
How are securities that are held to maturity treated if they are recategorizied as available for sale
You Report unrealized G/L as accumulated other comprehensie income
How are securities that are held to maturity treated if they are recategorizied as trading securities
You recognize unrealized G/L imediatlely
How are securities that are available for sale treated if they are recategorizied as held to maturity?
You report unrealized G/L as accumulated OCI - and you amoritize the gain or loss oer remaining life of security
How are securities that are available for sale treated if they are recategorizied as trading securities?
You immedatitly recognize unrealized G/L
How are securities that are Trading treated if they are recategorized as held to maturity?
Do not reverse unrealized G/L previously recognized in income.