Previously, marketable equity securities were reported using a technique referred to as "lower of cost or market." The current accounting standard requires fair value reporting for trading securities and securities available for sale. Some accountants believe that the FASB was inconsistent when Statement No. 115 was released requiring changes in the value of trading securities to be reported in the income statement and balance sheet, while changes in the value of securities available for sale are reported only in the balance sheet.
Required:
Evaluate the rationale for these two diverse reporting requirements for equity securities. What arguments could be made to support each treatment?

Question

Quizplus · Accepted Answer

The Answer of Previously, marketable equity securities were reported using a technique referred to as "lower of cost or market." The current accounting standard requires fair value reporting for trading securities and securities available for sale. Some accountants believe that the FASB was inconsistent when Statement No. 115 was released requiring changes in the value of trading securities to be reported in the income statement and balance sheet, while changes in the value of securities available for sale are reported only in the balance sheet.
Required:
Evaluate the rationale for these two diverse reporting requirements for equity securities. What arguments could be made to support each treatment?

Previously, Marketable Equity Securities Were Reported Using a Technique Referred