Mock 1 - No. 17

The answer says DeSoto is reclassified as available for sale and book value could decrease. BUT i think under available for sale, unrealized gain will go to comprehensive income which is part of equity (book value), so book value will increase Do i miss anything? thanks!

Nope unrealized only goes to NI under the Trading method. the MV of the bond goes to Comp. Income under equity for the Avail 4 Sale method

Anyone know why they say the investments should be Available for Sale and not Trading? It didnt say anywhere in the vignett that they were one or the other but the answers say it was teh AFS. Anyone have some clarity on this?

It does specifically say in the Vig that the firm does not classify any securities as trading.

AH, you are right. D@mn I need to remember that reading the whole vig is very critical. I somehow keep forgetting that…

so what is the idea?