From Time to Time, Debt Securities Must Be Reclassified When

question 45

Essay

From time to time, debt securities must be reclassified when conditions and circumstances surrounding the investment change.
Required:
Describe the general accounting procedures for reclassifying securities from one category to another-held to maturity, available for sale, or trading.

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Definitions:

Turnovers

The rate at which inventory or assets are sold and replaced or employees leave a company and are replaced over a given period.

Vertical Analysis

A method in financial analysis where each entry in a set of financial statements is listed as a percentage of another item, typically used for income statement and balance sheet analysis to show relative proportions.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net profit or loss.

Common-sized Balance Sheet

A balance sheet in which each line item is expressed as a percentage of total assets, facilitating comparison with other companies regardless of size.