Provide a report that includes your recommendations on reporting, and its effect on carrying value and earnings in each of the following situations:

1. The client has an equity security that has declined in value (i.e., the market value is less than what he or she paid for it [cost]). It is currently classified asavailable-for-sale, but the client would like to change its reporting to atrading security.
2. The client has a combination of investments in a portfolio that are long-term investments. The portfolio has increased in value on the whole, but there is one stock whose value has fallen by more than 60%. The client thinks that this decline in value is permanent.
3. The client has a portfolio of trading securities that has dropped 20% in value. He or she has another portfolio that is available-for-sale and its fair value has increased by 40%.