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Current Asset Classification

Current Asset Classification. Readily marketable Intention to convert to cash. Current Marketable Sec. Held to maturity Trading securities Available for sale. Mark to Market--FASB 115. Held to maturity…no adj. Trading securities…adjust to P & L Avail. For sale…adjust to equity.

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Current Asset Classification

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  1. Current Asset Classification • Readily marketable • Intention to convert to cash

  2. Current Marketable Sec. • Held to maturity • Trading securities • Available for sale

  3. Mark to Market--FASB 115 • Held to maturity…no adj. • Trading securities…adjust to P & L • Avail. For sale…adjust to equity

  4. Changing Mkt. Sec. Classifications • AFS to Trading • Recognize unrealized G or L previously deferred in the equity section • Trading to AFS • Recognize current unrealized G or L, then transfer • General rule • Mark to market first • Address prior deferrals second

  5. L/T Equity • Cost method or mark to market • Equity method • Consolidation

  6. Long-lived Assets • Acquisition • Use • Disposal

  7. Acquisition • Price + freight + prep + install + fees • Interest on construction

  8. Use • Maintenance or Betterment • Extend life • Improve quality • Increase output • Reduce cost

  9. Major Depreciation Methods • Straight line • (Cost - SV) / life • SYD (Sum of years digits) • (Cost - SV) * R/(n(n+1) / 2) • Double declining balance • NBV * 2 / life

  10. Disposal • Proceeds - NBV = Gain or loss • Trade-in…dissimilar assets • Value received vs. value given up

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