Codification Research Paper
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Resource: FASB Codification Link.
Write a 700- to 1,050-word paper.
Your client, Cascade Company, is planning to invest some of its excess cash in 5-year revenue bonds issued by the county and in the stock of one of its suppliers, Teton Co. Teton’s shares trade on the over-the-counter market. The company would like you to conduct some research on the accounting for these investments.
Access the FASB Codification.
Once you login using the username and password provided from the link above “login instructions” click on Education (from the menu across the top) > select FASB & GARS > click on FASB User Login and use the same credentials given for the initial login page. That will get you to the FASB Accounting Standards Codification (professional view) page.
Review the log-in instructions.
Provide Codification references for your responses below.
Incorporate your review of the FASB link to determine when the fair value of a security “readily determinable”.
Since the Teton shares do not trade on one of the large stock markets, Cascade argues that the fair value of this investment is not readily available.
Describe how an impairment of a security is accounted for.
Determine how close to maturity Cascade could sell an investment and still classify it as held-to-maturity.
To avoid volatility in their financial statements due to fair value adjustments, Cascade debated whether the bond investment could be classified as held-to-maturity; Cascade is pretty sure it will hold the bonds for five years.
List disclosures that must be made for any sale or transfer from securities classified as held-to-maturity.
Format your paper consistent with APA standards.
Submit your assignment to the Assignment Files tab.
Assignment Deliverables Summary:
1. How can the shares investment in Teton Inc. fair value be determined according to GAAP, provide FASB codification reference?
2. How should the bond investment in a County Government be classified if Cascade Company does not plan to hold the bond to its maturity? can the management change its intention in later years?
3. Under what condition and factors for an equity investment to be considered as “impaired”, provide FASB codification reference?
4. What are the disclosure requirements for reclassification of sale or transfer of security from one category to another?