AC501: Financial Accounting and Reporting
Unit 4 Assignment AIA
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 decreased in value. Ted Abernathy, the financial vice president, and Donna
Nottebart, the controller, are near year-end in the process of classifying for the first time this
securities portfolio in accordance with
FASB Statement No. 115.
Abernathy 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 (the equity securities) and as held to maturity (the debt securities).
Nottebart disagrees. She wants to classify those securities that have decreased in value as trading