The following are four unrelated situations involving investments in available-for-sale securities: Situation I A portfolio of available-for-sale

Question:

The following are four unrelated situations involving investments in available-for-sale securities:
Situation I
A of available-for-sale securities with an aggregate fair value in excess of cost includes one particular security whose fair value has declined to less than one-half of the original cost. The decline in value is considered to be other than temporary.
Situation II
The statement of financial position of a company does not classify assets and liabilities as current and noncurrent. The of available-for-sale securities includes securities normally considered current that have a net cost in excess of fair value of $2,000. The remainder of the has a net fair value in excess of cost of $5,000.
Situation III
An available-for-sale security, whose fair value is currently less than cost, is reclassified as a trading security.
Situation IV
A company’s of available-for-sale securities consists of the of one company. At the end of the prior year, the fair value of the security was 50% of original cost, and the effect was properly reflected in an allowance account. However, at the end of the current year, the fair value of the security had appreciated to twice the original cost.

Required
Explain the effect on classification, carrying value, and earnings for each of the preceding situations.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...