How are Available-For-Sale Debt securities recorded on the Balance Sheet?
They are recorded at fair value as either Current or Non-current assets.
Note: Only debt securities carry the AFS classification. Equity securities are no longer classified as AFS or Trading.
See FAR NINJA Notes (page 65) for new rules on Credit Losses for AFS debt securities (CECL - ASU 2016-13)
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How are Available-For-Sale Debt security Unrealized G/L treated?
They are included in Other Comprehensive Income (OCI).
Note: Only debt securities carry the AFS Classification.
Equity securities are no longer classified as AFS or Trading.
See FAR NINJA Notes (page 65) for new rules on Credit Losses for AFS debt securities (CECL - ASU 2016-13)
How are Unrealized G/L for Available-For-Sale Debt securities that are reclassified to Held-to-Maturity or Trading Debt Securities treated?
HTM: Stockholder’s Equity
Trading Debt Securities: Current Period
See FAR NINJA Notes (page 65) for new rules on Credit Losses for HTM & AFS debt securities (CECL - ASU 2016-13)
How are Held-to-Maturity securities recorded on the Balance Sheet?
They are recorded at amortized cost as Current or Non-current assets.
- If reclassified as AFS Debt, Unrealized G/L go to Stockholder’s Equity.
- If reclassified as Trading Debt, Unrealized G/L recognized in Current Period.
See FAR NINJA Notes (page 65) for new rules on Credit Losses for AFS debt securities (CECL - ASU 2016-13)
How are Held-to-Maturity securities Unrealized G/L treated?
Trick question - Unrealized gains or losses are not applicable because they are HTM.
See FAR NINJA Notes (page 65) for new rules on Credit Losses for AFS debt securities (CECL - ASU 2016-13)
How are Trading Debt Securities recorded on the Balance Sheet?
They are recorded at Fair Value as a Current Asset.
Unrealized gains/losses are recorded on the Income Statement.
If they are reclassified as held-to-maturity or available-for-sale, there is no effect upon transfer.
Note: Only debt securities carry the Trading Classification.
Equity securities are no longer classified as AFS or Trading.
See FAR NINJA Notes (page 65) for new rules on Credit Losses for AFS debt securities (CECL - ASU 2016-13)
How are Trading Debt Securities Unrealized G/L treated?
They are recorded on the Income Statement.
If they are reclassified as HTM or AFS, there is no effect upon transfer.
See FAR NINJA Notes (page 65) for new rules on Credit Losses for AFS debt securities (CECL - ASU 2016-13)
