A company buys debt securities at a par value of $300,000, and designates them as AFS securities. At the end of the year, the company still holds the securities but their fair value has declined to $250,000.
Required
For each circumstance below, indicated where the loss, if any, is reported, and how the investment is reported on the company's year-end balance sheet.
a. The company intends to sell the securities before the loss in value is recovered.
b. The company does not intend to sell the securities before the loss in value is recovered, and
(1) The loss is determined to be a credit loss.
(2) The loss is attributed as follows: $10,000 to changes in market conditions, and $40,000 to credit loss.

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The Answer of A company buys debt securities at a par value of $300,000, and designates them as AFS securities. At the end of the year, the company still holds the securities but their fair value has declined to $250,000.
Required
For each circumstance below, indicated where the loss, if any, is reported, and how the investment is reported on the company's year-end balance sheet.
a. The company intends to sell the securities before the loss in value is recovered.
b. The company does not intend to sell the securities before the loss in value is recovered, and
(1) The loss is determined to be a credit loss.
(2) The loss is attributed as follows: $10,000 to changes in market conditions, and $40,000 to credit loss.

A Company Buys Debt Securities at a Par Value of $300,000