CFA level 1 : Financial assets

mehak.officiallink
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CFA level 1 : Financial assets

Postby mehak.officiallink » Thu Nov 13, 2014 5:23 pm

Why is it that unrealised gains/losses of "securities held for trading" reported in the Income statement but for "securities available for sale" it is reported in other comprehensive income ?

mehak.officiallink
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CFA level 1 : Financial assets

Postby mehak.officiallink » Thu Nov 13, 2014 5:30 pm

And for the securities held till maturity and measured at amortised cost, are the unrealised gains or losses arising due to fluctuations in interest rates recorded anywhere ?

edupristine
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CFA level 1 : Financial assets

Postby edupristine » Fri Nov 14, 2014 7:02 am

Unrealised gains/losses of "securities held for trading" reported in the Income statement but for "securities available for sale" it is reported in other comprehensive income .

This is as per ASC (Accounting Standards Codification) 220. This is how the rule asks us to report the unrealized gains/losses from "Held for trading" securities.

edupristine
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CFA level 1 : Financial assets

Postby edupristine » Fri Nov 14, 2014 7:11 am

Yes, the changes in interest rates do have an effect on the prices of HTM securities.

mehak.officiallink
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Postby mehak.officiallink » Fri Nov 14, 2014 1:18 pm

HTM securities as shown at amortised cost in the balance sheet. So interest rate fluctuations should not have any effect on the balance sheet value of HTM securities. Am i right ?


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