The company will note the fair value change in a footnote, but will not record such a change on either the income statement of balance sheet (Spiceland, et al.). If, however, it becomes necessary to sell investments previously classed as hold-to-maturity, then the following adjustments are made. The cash received from the sale is recorded along with any discount on bond investment is sitting as an asset. The investment in the bonds will be recorded at face value. Any profit above face value will be recorded as gain on investments. This essentially ensures that the asset for discount on bond investment is reversed as a result of the sale. FASB No. 115 lists six conditions under which a change of security status from HTM could occur, including deterioration in the issuer's creditworthiness, a change in tax law, a major business combination or disruption, a change in statutory requirements, an increase in regulator's capital requirements or an...
115. The valuation for the reclassification would be on the date that the decision to reclassify takes place (Leone, 2008).Accounting Several terms and definitions are valuable to understand financial statements. In the United States, financial statements of public corporations are produced in accordance with the U.S. Generally Accepted Accounting Principles. These principles govern how the information for financial statements is compiled and presented. The purpose of these principles is so that all stakeholders can easily understand the statements and make comparisons across both time and across different companies, because the
Loyalty to the client was clearly placed above loyalty to the overall public good and the standards of the profession. "Enron paid Andersen $25 million for its audit…and $27 million for 'consulting' and other services" which meant that Anderson had a substantial financial stake in retaining Enron as a client (Kadlec 2002). The Enron case illustrates the difficulty of self-policing within the industry. Today, providing additional services besides the
Accounting In just about any part of the world, accrual accounting is preferred by government over cash accounting, for several good reasons. To understand these reasons, the first step is to understand what the difference is between accrual accounting and cash accounting. Cash accounting is a standard form of accounting for very small businesses and for households, where the entire basis of accounting is the cash flows in and out. Under
Accounting Systems There are many ways in accounting to get the job done right but two basic approaches give accountants a foundation to work upon. The purpose of this essay is to examine the differences between manual and computerized accounting systems. This essay will explain the history and development of both types of systems and will break down the advantages and disadvantages of them as well. Explanation and History of the Manual
Accounting Ethics Ethics of Accounting There have been breaches in the ethics of accounting in recent times. With that in mind, evaluate whether or not the current trend in the regulation of business establishments is favorable to ethical behavior. Supply supportive evidence to your answers (Jeter, 2003). The generally accepted principles of accounting and the standards of auditing in contemporary practice stipulate that the financial statements of any establishment should contain the following
Accounting The role of financial statements in investing is that they provide a consistent format that can be used by potential investors and other stakeholders to evaluate a company. There are several components that facilitate this happening. For publicly-traded firms, Generally Accepted Accounting Principles (GAAP) play a key role in the creation of financial statements. GAAP is a common set of accounting principles and procedures that companies use to compile their
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