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Financial Statement Effect of Equity Securities Presented below is a situation involving equity securities: An equity...

Financial Statement Effect of Equity Securities

Presented below is a situation involving equity securities:

An equity security, whose fair value is currently less than cost, is classified as available ‐ for ‐ sale but is to be reclassified as trading.

Instructions

Answer the following question.

What is the effect upon carrying value and earnings for the scenario presented?

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Answer #1

Anstoeo in the given case te aviable -for-sale cauity Sccunie n not beeclassited as taoding Secvnhes The couity secon tíu an be δeclassified form ankble -to-sale to hcld to-meodturity and vice vexsa As a ses it. in Re Riven Situc fion fexe l be no chasge in Re sniny of tte conpaxy The Cair value 4, i刂be treated as tee odsusted osthe Secvrity and old Continue tr te

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