The following is from the footnotes to The Coca-Cola Company's recent financial statements. (Note: Coca-Cola's 2016 disclosures are consistent with the former accounting rules for marketable equity securities.)
Trading Securities
As of December 31, 2016 and 2015, our trading securities had a fair value of $384 million and $322 million, respectively, and consisted primarily of equity securities. The Company had net unrealized gains on trading securities of $39 million, $19 million and $40 million as of December 31, 2016, 2015 and 2014, respectively. The Company's trading securities were included in the following line items in our consolidated balance sheets (in millions):
Available-for-Sale and Held-to-Maturity Securities
As of December 31, 2016 and 2015, the Company did not have any held-to-maturity securities. Available-for-sale securities consisted of the following (in millions):
In 2016 and 2015, the Company did not have any held-to-maturity securities. The Company's available-for-sale securities were included in the following captions in our consolidated balance sheets (in millions):
Continued next page
Required:
a. Explain the difference between "Held-to-maturity securities," "Available-for-sale securities," and "Trading securities."
b. What amount does The Coca-Cola Company report for available-for-sale securities on its balance sheets at December 31, 2016, and 2015? How are these values measured?
c. What are the net unrealized gains (losses) on available-for-sale securities for 2016 and 2015?
d. How did these unrealized gains (losses) on available-for-sale securities affect the company's reported income in 2016?
e. What is the difference between realized and unrealized gains and losses? Are realized gains and losses treated differently in the income statement than unrealized gains and losses? Under new accounting rules that take effect in 2018, how does the treatment of unrealized gains and losses differ?

Question

The following is from the footnotes to The Coca-Cola Company's recent financial statements. (Note: Coca-Cola's 2016 disclosures are consistent with the former accounting rules for marketable equity securities.)
Trading Securities
As of December 31, 2016 and 2015, our trading securities had a fair value of $384 million and $322 million, respectively, and consisted primarily of equity securities. The Company had net unrealized gains on trading securities of $39 million, $19 million and $40 million as of December 31, 2016, 2015 and 2014, respectively. The Company's trading securities were included in the following line items in our consolidated balance sheets (in millions):
  Available-for-Sale and Held-to-Maturity Securities
As of December 31, 2016 and 2015, the Company did not have any held-to-maturity securities. Available-for-sale securities consisted of the following (in millions):
  In 2016 and 2015, the Company did not have any held-to-maturity securities. The Company's available-for-sale securities were included in the following captions in our consolidated balance sheets (in millions):
  Continued next page
Required: 
a. Explain the difference between "Held-to-maturity securities," "Available-for-sale securities," and "Trading securities."
b. What amount does The Coca-Cola Company report for available-for-sale securities on its balance sheets at December 31, 2016, and 2015? How are these values measured?
c. What are the net unrealized gains (losses) on available-for-sale securities for 2016 and 2015?
d. How did these unrealized gains (losses) on available-for-sale securities affect the company's reported income in 2016?
e. What is the difference between realized and unrealized gains and losses? Are realized gains and losses treated differently in the income statement than unrealized gains and losses? Under new accounting rules that take effect in 2018, how does the treatment of unrealized gains and losses differ?

Quizplus · Accepted Answer

The Answer of The following is from the footnotes to The Coca-Cola Company's recent financial statements. (Note: Coca-Cola's 2016 disclosures are consistent with the former accounting rules for marketable equity securities.)
Trading Securities
As of December 31, 2016 and 2015, our trading securities had a fair value of $384 million and $322 million, respectively, and consisted primarily of equity securities. The Company had net unrealized gains on trading securities of $39 million, $19 million and $40 million as of December 31, 2016, 2015 and 2014, respectively. The Company's trading securities were included in the following line items in our consolidated balance sheets (in millions):
  Available-for-Sale and Held-to-Maturity Securities
As of December 31, 2016 and 2015, the Company did not have any held-to-maturity securities. Available-for-sale securities consisted of the following (in millions):
  In 2016 and 2015, the Company did not have any held-to-maturity securities. The Company's available-for-sale securities were included in the following captions in our consolidated balance sheets (in millions):
  Continued next page
Required: 
a. Explain the difference between "Held-to-maturity securities," "Available-for-sale securities," and "Trading securities."
b. What amount does The Coca-Cola Company report for available-for-sale securities on its balance sheets at December 31, 2016, and 2015? How are these values measured?
c. What are the net unrealized gains (losses) on available-for-sale securities for 2016 and 2015?
d. How did these unrealized gains (losses) on available-for-sale securities affect the company's reported income in 2016?
e. What is the difference between realized and unrealized gains and losses? Are realized gains and losses treated differently in the income statement than unrealized gains and losses? Under new accounting rules that take effect in 2018, how does the treatment of unrealized gains and losses differ?

The Following Is from the Footnotes to the Coca-Cola Company's