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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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A security in a portfolio of available-for-sale securities is transferred to the trading category. The security should be transferred between the corresponding portfolios at:

  1. a. book value at date of transfer if higher than the fair value at date of transfer
  2. b. fair value at date of transfer, regardless of its cost
  3. c. cost, regardless of the fair value at date of transfer
  4. d. lower of its cost or fair value at date of transfer

To determine

Identify the manner in which the security should be transferred between the corresponding portfolios.

Explanation

The transfer of security from one category to another category would be accounted at the fair value during the time of transfer. Based on the classification of the securities that are transferred, the unrealized gain or loss is either removed or created...

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