Tara-Anderson-Week 3 Discussion

Tara-Anderson-Week - You determine that one method of increasing net income would be to reclassify all available-for-sale securities that have

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
You determine that one method of increasing net income would be to reclassify all available-for-sale securities that have experienced an increase in market value as if they were purchased as trading securities. 1. Would this reclassification achieve the desired results? Yes as long as they sold them at fair market value that exceeds the historical cost, if it is below then you would have a loss and it would not increase the net income like they want. Once it is sold it would be recorded as a gain and would increase the net income. Not only are available-for-sale securities used for trading but that can be held short term or long term to reach the amount they want for the most increase in net income when sold. 2. Is this reclassification within the rules? The reclassification is within the rules as long as they report the transition in the period it happens, transfer properly, and is enclosed in the notes of the financial statements within the period it all happens.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/29/2011 for the course EC 2011 taught by Professor Johnson during the Spring '11 term at FIT.

Page1 / 2

Tara-Anderson-Week - You determine that one method of increasing net income would be to reclassify all available-for-sale securities that have

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online