Case 10.1 - Case 10-1 A Discuss the role that managerial intention plays in the accounting treatments of equity securities that have a readily

Case 10.1 - Case 10-1 A Discuss the role that managerial...

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8/5/16 Case 10-1 A. Discuss the role that managerial intention plays in the accounting treatments of equity securities that have a readily determinable fair value under SFAS No 115? Managers Intention’s hold great weight on the classifications and recording of equities in the workplace. Equity securities can be classified as available for sale or trading securities depending on how they plan to utilized and carry out the securities and are both measured under Fair Value valuation. Available for sale are not recording under earnings and are incorporated in OCI. Trading securities are reported to earnings. By recording it this way management can decide on how to classify their equity securities. B. What income statement effect, if any, would the change in classification have for Q-tip? If Q-tip changed the way they classify their securities differently, the unrecognized gain/loss at the transfer date would be reported in earnings and not in Other Comprehensive Income. This would generate a showing of more income on the
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