Paragraph
Number |
6. | At acquisition, an enterprise shall classify debt and equity securities into one of three categories: held-to-maturity, available-for-sale, or trading. Classification is reassessed at each reporting date. | |
7. | Held to maturity--only if the reporting entity has the positive intent to hold the securities to maturity | |
Measured at amortized cost in the statement of financial position. | ||
Trading securities and Available for Sale Securities | ||
12. | Debt securities not held to maturity | |
Equity securities that have readily determined fair values | ||
Are classified as one of the following categories and measured at fair value: | ||
a. | Trading securities--securities held for current resale | |
b. | Securities available for sale -those not classified as trading or held-to maturity | |
Reporting changes in fair value | ||
13 | Unrealized holding gains and losses- | |
for trading securities: shall be included in earnings. | ||
For securities available for sale (both current and noncurrent): shall be excluded from earnings and reported in other comprehensive income [changed from as a net amount in a separate component of shareholders' equity] | ||
14 | Dividend and interest income, including amortization of premium and discount, for all three categories shall continue to be included in earnings. | |
Realized gains an losses for securities classified as either available for sale or held to maturity shall continue to be reported in earnings. | ||
Transfers between Categories of Investments | ||
15 | Transfer of a security between categories of investments shall be accounted for at fair value as the sale and repurchase of the transferred security. | |
The security's unrealized holding gain or loss at the time of transfer shall be accounted for as follows: | ||
a. | For a security transferred from the trading category, the unrealized holding gain or loss at the date of the transfer will have already been recognized in earnings and shall not be reversed. | |
b. | For a security transferred into the trading category, the unrealized holding gain or loss at the date of the transfer shall be recognized in earnings immediately. | |
c. | for a debt security transferred into the available-for- sale category from the held-to-maturity category, the unrealized holding gain or loss at the date of the transfer shall be reported in other comprehensive income[ changed from recognized in a separate component of shareholders' equity by FAS No. 130, Reporting Comprehensive Income] | |
d. | For a debt security transferred into the held-to-maturity category from the available-for-sale category, the unrealized holding gain or loss at the date of the transfer shall continue to be reported in a separate component of shareholders' equity, such as other comprehensive income, but shall be amortized over the remaining life of the security as an adjustment of yield in a manner consistent with the amortization of any premium or discount. | |
Transfers out of
the
held-to-maturity
category should be rare. Transfers into or from the trading category also should be rare. |
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Impairment of Securities | ||
16 | If a decline in fair value of an individual security below the amortized cost basis is judged to be other than temporary, the cost of the individual security shall be written down to the fair value as a new cost basis. The amount of the write-down shall be included in the earnings (accounted for as a realized loss). | |
this new cost basis shall not be changed for subsequent recoveries in fair value. | ||
17 | All trading securities are current assets | |
Securities available for sale--either current or noncurrent, as appropriate |