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M351_Notes-Day_19_Investments_in_Debt_Securities_1

M351_Notes-Day_19_Investments_in_Debt_Securities_1 - M351...

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M351 Notes, Class 19, Investment in Debt Securities, pp. 837-850 A. Debt securities (issued by other companies, or governmental entities; does not include A/R and loans receivable as those instruments do not meet the definition of securities) are to be placed in three portfolios: Hold to maturity —company has the intent and ability to hold to maturity Trading —securities to be sold in the near term; produce income or losses on short-term price differences Available for sale —securities not in the hold to maturity or trading portfolios B. Accounting and reporting requirements for debt securities: Category Valuation Unrealized Holding Gains or Losses Other Income Effects Hold-to-maturity Amortized cost Not recognized Interest when earned gains and losses from sale Trading Fair value Recognized in net income Interest when earned; gains and losses from sale Available-for-sale Fair value Recognized as other comprehensive income and as a separate component of stockholders’ equity Interest when
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