1. Under current GAAP for marketable securities, trading securities and available-for-sale securities are reported at their fair...
Question:
1. Under current GAAP for marketable securities, trading securities and available-for-sale securities are reported at their fair value, but held-to-maturity securities are reported at their amortized cost.
Required:
Explain why there is a difference in the reporting requirements for these three classifications of marketable securities. Minimum 3 paragraphs.
2/ A marketable security is initially classified as trading security, available-for-sale security, or held-to-maturity debt security. Subsequently, security can be transferred among categories.
Required:
Explain the accounting for a related unrealized holding gain or loss when a transfer to another category occurs. Minimum 3 paragraphs.
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso