[Anonymous]

I’ve hit peak studying confusion period.

I just wanted to clarify my understanding of something is correct. when a long term asset is considered “held for sale”, its’ written up/down to FMV, and those gains/losses are reported in earnings, not OCI, correct? this is different than “available for sale” fixed income securities for which the unrealized is recognized in OCI.

[Anonymous]

@cm185203,

You might have better luck reposting your questions in the FAR study forum, as opposed to in the general forum area…

[Anonymous]

I dont get it – it's tagged as “FAR Review” and shows up when you go to that forum?

https://www.another71.com/cpa-exam-forum/forum/far/financial-accounting-reporting/

[Anonymous]

Well, there's held-to-maturity which is carried at cost not FV, so they must be referring to available for sale.

[Anonymous]

@calvinus – thanks for your help. i dont think youre reading my question correct.

[Anonymous]

@calvinus,

The OP is referring to assets which are classified as held-for-sale or held-for use. Assets that a company classifies as held for sale are not depreciated and are measured at the lower of carrying amount or FV minus costs to sell. My understanding is that this applies more to fixed assets, disposal groups, and PP&E rather than to debt investments like bonds which are classified as HTM, TS, or AFS.

@cm185203 ,

There is a study group for each CPA exam section at the top of the page when you get into the forum.

To answer your question, gains and losses on write downs to Fv minus costs to sell for assets classified as held for sale are recognized in net income. OCI is basically for AFS, foreign currency translation, Pension PSC, and the effective portion C/F hedges and some other random “stuff”.

It sounds like you might need a better sense of the big picture when it comes to these topics. I've been there for sure. Try taking a step back and looking at a sample balance sheet and I/S and picking out where these items get reported and what they actually are. Then try thinking about the rules after that. It's easy to get lost in all the minutiae…

[Anonymous]

Long term assets are property, plant, and equipment. In your question, disposal of the asset is referring to PP&E. Meaning the company plans to sale the asset, therefore any gains and losses go to the income statement.

Available for sale is a type of INVESTMENT security. So you are right that they are not the same.

Try to start by focusing on the big picture (Financial Statements as a whole). Once you have that down, these wording similarities can't trip you up.

[Anonymous]

Haha guys, my bad. I had a feeling something wasn't right. Actually, no, I didn't know.

[Author]

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