[Anonymous]

I am on Roger chapter 4 marketable securities, and am wondering how do you understand all these rules? For each of the three categories, trading, available for sale, and held to maturity, there are differences in how it is reported on the balance sheet, how the unrealized holding g/l are reported on the income statement, and how the realized g/l are reported on the income statement. And this is on top of the various things you have to know if these securities change from one classification to another. How do you understand all this stuff?

[hunter32]

Make yourself a little chart and then practice it over and over. Also first read what the question is asking so you're not tricked into spending time on a question where they ask how much is recognized on the income statement when they are all available for sale.

BEC - 80 (Becker)
AUD - 92 (Becker+NINJA MCQ)
FAR - 87 (Becker+NINJA MCQ)
REG - 90 (Becker+NINJA MCQ and Audio)

[Zuly]

Hi Determined. I also had trouble in the beginning understanding how to account for these. I typed up and wrote out the chart that Roger has in his book for the rules, etc. and then to understand how to do them I just drilled a bunch of MCQs by type and really started to see the pattern to work the problems. I did J/Es and their corresponding T-accounts. I'd set up the t-account by showing the investment account and then do the corresponding allowance account and then see how the investment would be adjusted based on how the question was asked. On my second try at FAR I made sure I nailed this part.

FAR - (11/01/14) 71 (02/07/15) 79
AUD - (04/30/15) 86
BEC - (07/21/15) 73 (10/01/15) 75
REG - (11/30/15) 55 (05/19/16) 74

[Zuly]

Yes, hunter makes a good point. Make sure you read the question carefully to see if they are asking you for trading or AFS…trading is always I/S and AFS is OCI/Balance Sheet if unrealized gain/loss and I/S if it's realized gain/loss. Another thing it its easier make sure to look up the gain/loss effects on the I/S and B/S that are provided by Roger's books so that way it gives you a clear picture on where they go.

FAR - (11/01/14) 71 (02/07/15) 79
AUD - (04/30/15) 86
BEC - (07/21/15) 73 (10/01/15) 75
REG - (11/30/15) 55 (05/19/16) 74

[Anonymous]

it kind of made sense to me.

Trading sounded similar to the inventory, so i could see gain and loss going to I/S, similar to lower of cost or market rule for inventory. AFS were sort of half way from there to HTM, so I could see how they were at FMV on a B/S, but gain/loss is deferred. The rest was easy after I understood these two.

The only problem I had is with reclassifying AFS to Trading, I don't remember it now

[Author]

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