1. 1 Investment in Debt and Equity Securities An electronic presentation by Douglas Cloud by Douglas Cloud Pepperdine University Pepperdine University An electronic presentation by Douglas Cloud by Douglas Cloud Pepperdine University Pepperdine University chapter chapter 14

2. 2 1.Determine why companies invest in other companies. 2.Understand the varying classifications associated with securities. 3.Account for the purchase of debt and equity securities. 4.Account for the recognition of revenue from investments. Learning ObjectivesContinuedContinued

3. 3 5.Account for the change in value of securities. 6.Account for the sale of investment securities. 7.Record the transfer of securities between categories. 8.Properly report purchases, sales, and changes in value of investment securities in the statement of cash flows. Learning ObjectivesContinuedContinued

4. 4 9.Explain the proper classification and disclosure of investments in securities. 10.Compare the accounting for securities under U.S. GAAP with the international standard in IAS 39. Learning Objectives EXPANDED MATERIAL 11.Account for the impairment of a loan receivable.

5. 5 Investment in Debt and Equity Securities—2001 Total Investment Percentage of Company (in billions) Total Assets Berkshire Hathaway$69.042.4% Microsoft17.734.7 Coca-Cola5.424.2 Citigroup160.815.3 AT&T24.514.8 Verizon10.26.0

6. 6 Time Line of Business Issues Involved with Investment Securities DETERMINE purpose of investment ?

7. 7 Time Line of Business Issues Involved with Investment Securities CLASSIFY investments a, b, c

8. 8 Time Line of Business Issues Involved with Investment Securities Cloud Corporation $100 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Cloud Corporation $100 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Good Buy Corporation $10 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. PURCHASE securities

9. 9 Time Line of Business Issues Involved with Investment Securities Cloud Corporation $100 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Cloud Corporation $100 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Good Buy Corporation $10 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. EARN AND RECOGNIZE a return

10. 10 Time Line of Business Issues Involved with Investment Securities MONITOR changes in value Cloud Corporation $100 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Cloud Corporation $100 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Good Buy Corporation $10 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. + - + - +

11. 11 Time Line of Business Issues Involved with Investment Securities Cloud Corporation $100 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Cloud Corporation $100 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Good Buy Corporation $10 par value xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. SELL securities

12. 12 Time Line of Business Issues Involved with Investment Securities TRANSFER securities between categories a b c

13. 13 Time Line of Business Issues Involved with Investment Securities DISCLOSE status of portfolio at the end of the period

14. 14 Why Companies Invest in Other Companies Safety Cushion Cyclical Cash Needs Investment for a Return ContinuedContinued

15. 15 Why Companies Invest in Other Companies Purchase for Control Investment for Influence

16. 16 1.A maturity value, representing the amount to be repaid to the debt holder at maturity. 2.An interest rate that specifies the periodic interest payments. 3.A maturity date, indicating when the debt obligation will be redeemed. Classification of Investment in Securities Debt securities typically have the following characteristics:

17. 17 These shares of stock typically carry with them the right to collect dividends and vote on corporate matters. Equity securities represent ownership in a company. Equity securities have the potential for significant increases in price. Classification of Investment in Securities

18. 18 Debt/Equity Securities Trading Securities purchased for sale in the near future. Held-to- Maturity Securities purchased with the intent to hold until maturity. Available- for-sale Securities not classified as trading or held-to-maturity. Classification of Investment in Securities

19. 19 Available- for-sale Trading Held-to- maturity Debt Equity Method Equity Classification of Investment in Securities Cost Method

20. 20 Equity securities represent ownership in a company. These shares of stock typically carry with them the right to collect dividends and to vote on corporate matters. Equity Method Securities

21. 21 Equity Method Securities These are securities purchased with the intent to control or significantly influence the operations of the investee.

22. 22 Equity Method Securities At least 20 percent of the outstanding voting stock must be owned to have this significant influence or control. Even then, there may be evidence to support the fact that even a 20 percent investment does not have significant influence.

23. 23 Different Accounting Treatments Classification of Securities Types of Securities Disclosure on the Balance Sheet Treatment of Temporary Changes in Value Held to maturityDebtAmortized costNot recognized Available for saleDebt/equityFair market valueReported in stockholders’ equity TradingDebt/equityFair market valueReported on the income statement Equity methodEquityHistorical cost Not recognized adjusted for changes in the assets of the investee

24. 24 Purchases of Debt Securities On May 1, Douglas Company purchases $100,000 in U.S. Treasury notes at 104¼, including brokerage fees. Interest is 9% payable semiannually on January 1 and July 1. The debt securities are classified by the purchaser as trading securities. Accrued interest on May 1 is $3,000, calculated as follows: $100,000 x.09 x 4/12 = $3,000

25. 25 Purchases of Debt Securities May 1 Investment in Trading Securities104,250 Interest Receivable3,000 Cash107,250 Purchase date: Asset Approach ContinuedContinued

26. 26 Purchases of Debt Securities May 1 Investment in Trading Securities104,250 Interest Revenue3,000 Cash107,250 Purchase date: Revenue Approach ContinuedContinued

27. 27 Purchases of Debt Securities Receipt of semiannual payment: July 1 Cash4,500 Interest Receivable3,000 Interest Revenue1,500 Asset Approach July 1 Cash4,500 Interest Revenue4,500 Revenue Approach

28. 28 Purchase of Equity Securities Purchased 10,000 shares of Dave’s Deli common shares at $2 per share. Treated as available-for-sale because management has no intention of holding these securities for a a long period of time and will sell them as soon as it is economically advantageous

29. 29 Available-for-Sale Investment in Available-for- Sale Securities—AB Company 2,000 Cash 2,000 Purchase of Equity Securities Citty Co. purchased 1,000 shares of AB Company common shares at $2 per share.

30. 30 Citty Co. purchased 100,000 shares of AB Company common shares at $2 per share. Purchase of Equity Securities Assume that the 100,000 shares purchased represents 20 percent of the outstanding voting stock of AB Company. This investment gives the investor significant influence over AB Company.

31. 31 Purchased 100,000 shares of Dave’s Deli common shares at $2 per share. Trading Securities Investment in Trading Securities— AB Company Common Stock 2,000 Cash 2,000 Purchase of Equity Securities

32. 32 PV of Debt Securities On January 1, 2004, Silmaril Technologies purchased 5-year, 10% bonds with a face value of $100,000 and interest payable semiannually on January 1 and July 1. The market rate on bonds of similar quality and maturity is 8%.

33. 33 PV of Debt Securities Present value of principal: FV = $100,000; N = 10; I = 4%$ 67,556 Present value of interest payments: PMT = $5,000; N = 10; I = 4% 40,554 Total present value of the bonds$108,110 Investment in Trading Securities108,100 Cash108,100

34. 34 Interest Revenue for Debt Securities (Trading) When the first interest payment is received from Silmaril, the following entry would be made: July 1 Cash5,000 Interest Revenue5,000

35. 35 Interest Revenue for Debt Securities (Held-to-Maturity) When the first interest payment is received from Silmaril, the following entry would be made: July 1 Cash5,000 Interest Revenue4,324 Investment in Held-to- Maturity Securities676 $108,110 x.04

36. 36 Interest Revenue for Debt Securities (Held-to-Maturity) When the second interest payment is received, the interest revenue is determined by the yield times the bond carrying value. Jan 1 Cash5,000 Interest Revenue4,297 Investment in Held-to- Maturity Securities703 $107,434 x.04

37. 37 Determining the Appropriate Accounting Method 0% 20%50%100% No significant influence Significant influence Control Ownership Percentage Account for as trading or available-for-sale Equity method Equity method and consolidation procedures

38. 38 Determining the Appropriate Accounting Method In the absence of persuasive evidence to the contrary, equity securities are classified as trading or available for sale when ownership is less than 20 percent. Summary

39. 39 Determining the Appropriate Accounting Method The equity method is used when ownership is such that the investor has the ability to significantly influence or control the investee’s operations. Summary

40. 40 Determining the Appropriate Accounting Method Ownership Interest Control or Degree of Influence Accounting Method Applicable Standard More than 50%ControlEquity methodAPB Opinion #18 and consolidationFASB Exposure proceduresDraft 20% to 50%SignificantEquity methodAPB Opinion #18 influence Less than 20%No Account for asFASB Statement significanttrading or No. 115 influenceavailable for sale

41. 41 AB Company announces dividends of $0.25 per share. Assume that Citty Co. owns 1,000 shares Cash 250 Dividend Revenue250 Revenue for Equity Securities Classified as Trading and AFS

42. 42 Revenue for Equity Securities Classified as Trading and AFS AB Company announces dividends of $0.25 per share. Assume that Citty Co. owns 100,000 which represents 50 percent of the outstanding voting stock. Cash 25,000 Investment in AB Company Stock25,000

43. 43 Revenue for Equity Securities Classified as Trading and AFS AB Company reports an income of $250,000 for the year. Again, assume that Citty Co. owns 50 percent of the outstanding voting stock. Investment in AB Company Stock 125,000 Income from Investment in AB Company Stock125,000

44. 44 Equity Method: Purchase For More than Book Value The net assets of Stewart Inc. was $500,000 at the time Phillips Manufacturing Co. purchased 40% of the common shares for $250,000 on January 1, 2005. The market value of the net assets of Stewart Inc. would be $625,000, which is $125,000 more than the book value. Only $50,000 of this is attributed to depreciable assets. $250,000 ÷.40

45. 45 Equity Method: Purchase For More than Book Value The average remaining life of the depreciable assets is 10 years and the special operating license is to be amortized over 20 years. Additional depreciation ($50,000 x 0.40)/10$2,000 License amortization ($75,000 x 0.40)/20 1,500 $3,500

46. 46 Equity Method: Purchase For More than Book Value Stewart Inc. declared and paid dividends of $70,000 to common stockholders during 2005, and it reported net income of $150,000 for the year ended December 31, 2005.

47. 47 Equity Method: Purchase For More than Book Value Investment in Stewart Inc. Common Stock Acquisition cost250,000 Share of earnings60,000 Dividends 28,000 Additional depreciation2,000 Additional amortization1,500 310,00031,500 Balance278,500

48. 48 Accounting for Temporary Changes in Value of Securities Classification of Security Disclosed at Report FMV Trading Fair market value Income statement Held-to- maturity Amortized cost Not recognized Available- for-sale Fair market value Stockholder’s equity Change On

49. 49 Eastwood Inc. purchased the following securities on March 23, 2005. Trading securities: –Purchase price (Security #1)$ 8,000 –Value end of year (#1)$ 7,000 –Purchase price (#2)$ 3,000 –Value end of year (#2)$ 3,500 Available-for-sale securities: –Purchase price (#3)$ 5,000 –Value end of year (#3)$ 6,100 Accounting for Temporary Changes in Value of Securities ContinuedContinued

50. 50 Available-for-sale securities: –Purchase price (#4)$12,000 –Value end of year (#4)$11,500 Held-to-maturity securities: –Purchase price (#5)$20,000 –Value end of year (#5)$19,000 Accounting for Temporary Changes in Value of Securities ContinuedContinued

51. 51 Accounting for Temporary Changes in Value of Securities Investment in Trading Securities11,000 Investment in Available-for-Sale Securities17,000 Investment in Held-to-Maturity Securities20,000 Cash48,000 Initial Purchase Entry ContinuedContinued

52. 52 December 31, 2005: Unrealized Loss on Trading Securities500 Market Adjustment—Trading Securities500 By the end of the year, the value of the trading securities decreased from $11,000 to $10,500. Accounting for Temporary Changes in Value of Securities ContinuedContinued

53. 53 December 31, 2005: Market Adjustment—Available-for-Sale Securities600 Unrealized Increase/Decrease in Value of Available-for-Sale Securities600 By the end of the year, the value of the available-for-sale securities increased from $17,000 to $17,600. Accounting for Temporary Changes in Value of Securities

54. 54 FASB No. 115 puts an end to “cherry-picking.” This is the practice of selectively selling securities whose prices have increased, while keeping those that have experienced losses or have maintained their historical cost. Accounting for Temporary Changes in Value of Securities

55. 55 Partial Balance Sheet for Eastwood Inc. Assets Invest. in trading securities$11,000 Market adjustment—trading sec. (500) $10,500 Invest. in available-for-sale sec.$17,000 Market adjustment 600 17,600 Invest. in held-to-maturity sec. 20,000 $48,100 Stockholders’ Equity Add unrealized increase in available-for-sale securities $ 600 Accounting for Temporary Changes in Value of Securities

56. 56 Partial Income Statement for Eastwood Inc. Other expenses and losses: Unrealized loss on trading securities$500 Accounting for Temporary Changes in Value of Securities

57. 57 Sale of Securities On April 1, 2005, the investment in Silmaril’s debt securities is sold for $103,000, which includes accrued interest of $2,500. Interest revenue of $2,105 ($105,248 x.08 x 3/12) would be recorded. On January 1, the debt securities had a carrying value of $105,248. The required amortization for the three-months’ premium between January 1 and April 1 is $395.

58. 58 Sale of Securities Entry to record accrued revenue and to amortize premium: Apr. 1Interest Receivable2,500 Investment in Held-to Maturity Securities395 Interest Revenue2,105 Entry to record sale: Apr. 1 Cash103,000 Realized Loss on Sale of Securities4,353 Interest Receivable2,500 Investment in Held-to Maturity Securities104,853

59. 59 Transferring Securities Between Categories Transferred Treatment of Change in Value From tradingAny unrealized change in value not previously recognized will be recognized in net income in the current period. To tradingAny unrealized change in value not previously recognized will be recognized in net income in the current period. From held to maturity to available for sale Recognize any unrealized change in value in a stockholders’ equity account. ContinuedContinued

60. 60 Transferring Securities Between Categories Transferred Treatment of Change in Value From available for sale to held to maturity Any unrealized change in value recorded in a stockholders’ equity account is to be amortized over the security’s remaining life using the effective-interest method. Statement of Financial Standards No. 115, par. 15d

61. 61 Assume: Cost of trading security$3,000 Fair market value, end of 20063,600 Fair market value at transfer date3,800 Transferring Securities Between Categories ContinuedContinued

62. 62 Transferring Securities Between Categories Investment in Available-for-Sale Securities3,800 Market Adjustment--Trading Securities 600 Unrealized Gain on Transfer of Securities 200 Investment in Trading Securities3,000

63. 63 Transferring Securities Between Categories Assume: Cost of available-for-sale security$12,000 Fair market value, end of 200610,700 Transfer from the available- for-sale category to the trading security category. ContinuedContinued

64. 64 Investment in Trading Securities10,300 Market Adjustment--Trading Securities1,300 Unrealized Loss on Transfer of Securities 1,700 Unrealized Increase/Decrease in Value of Available-for- Sale Securities1,300 Investment in Available-for- Sale Securities12,000 Transferring Securities Between Categories

65. 65 Assume: Cost of held-to-maturity security20,000 Fair market value, Dec. 31, 2006 20,700 Record a transfer from held-to-maturity to the available-for-sale category. Transferring Securities Between Categories ContinuedContinued

66. 66 Investment in Available-for- Sale Securities 20,400 Unrealized Increase/ Decrease in Value of Available-for-Sale Securities400 Investment in Held-to- Maturity Securities 20,000 Transferring Securities Between Categories

67. 67 Assume: Cost of available-for-sale securities$5,000 Fair market value, end of 20066,500 Fair market value at transfer date5,900 Record a transfer from available- for-sale to held-to-maturity. Transferring Securities Between CategoriesContinuedContinued

68. 68 Investment in Held-to-Maturity Securities 5,900 Unrealized Increase/Decrease in Value of Available-for-Sale Securities600 Investment in Available-for- Sale Securities5,000 Market Adjustment— Available-for-Sale Securities 1,500 Transferring Securities Between Categories

69. 69 Cash Flows from Gains and Losses on Available-for-Sale Caesh Company began with a $1,000 investment on January 1, 2005. Cash sales$1,700 Cash expenses(1,400) Purchases of investment securities(600) Sale of investment securities (costing $200)170 ContinuedContinued

70. 70 Cash Flows from Gains and Losses on Available-for-Sale The market value of the remaining securities was $500 on December 31, 2005. ContinuedContinued Sales$1,700 Expenses (1,400) Operating income$ 300 Realized loss on sale of securities (30) Net income$ 270

71. 71 Cash Flows from Gains and Losses on Available-for-Sale Caesh Company will report a $100 unrealized increase in the value of it available-for-sale portfolio. This $100 unrealized increase is reported as an increase in Accumulated Other Comprehensive Income. ContinuedContinued

72. 72 Cash Flows from Gains and Losses on Available-for-Sale The statement of cash flows for Caesh Company for 2005 appear as follows: Operating activities: Net income$ 270 Plus realized loss on sale of securities 30$ 300 Investing activities: Purchase of investment securities$(600) Sale of investment securities 170(430) Financing activities: Initial investment by owner 1,000 Net increase in cash$ 870

73. 73 Classification and Disclosure Trading securities –The change in net unrealized holding gain or loss that is included in the income statement. Available-for-sale securities –Aggregate fair value, gross unrealized holding gains and gross unrealized holding losses, and amortized cost basis by major security type. –The proceeds from sales of available-for-sale securities and the gross realized gains and losses on those sales and the basis on which cost was determined in computing realized gains and losses. ContinuedContinued

74. 74 Available-for-sale securities (continued): –The change in net unrealized holding gain or loss on available-for-sale securities that has been included in stockholders’ equity during the period. Held-to-maturity securities: –Aggregate fair value, gross unrealized holding gains and gross unrealized holding losses, and amortized cost basis by major security type. –The company should disclose information about contractual maturities. Classification and DisclosureContinuedContinued

75. 75 Transfers of securities between categories: –Gross gains and losses included in earnings from transfers of securities from available-for- sale into the trading category. –For securities transferred from held-to-maturity, the company should disclose the amortized cost amount transferred, the related realized or unrealized gain or loss, and the reason for transferring the securities. Classification and Disclosure

76. 76 The End chapter 14

77. 77