Week 5 Chapter 17-7 (ACCT-311) - CLASS CONFERENCES CONCEPTS...

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C LASS C ONFERENCES : C ONCEPTS F OR A NALYSIS Week #5 Chapter 17 (CA 17-7): Fair Value Question: Addison Manufacturing holds a large portfolio of debt and equity securities as an investment. The fair value of the portfolio is greater than its original cost, even though some securities have decrease in value. Sam Beresford, the financial vice president, and Angie Nielson, the controller, are near year-end in the process of classifying for the first time this securities portfolio in accordance with GAAP. Beresford wants to classify those securities that have increased in value during the period as trading securities in order to increase net income this year. He wants to classify all the securities that have decreased in value as Available-For-Sale (Equity Securities) and as Held-To-Maturity (Debt Securities). Nielson disagrees. She wants to classify those securities that have decreased in value as trading securities and those that have increased in value as Available-For-Sale (Equity) and Held-To-Maturity (Debt).
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