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Basic Question 5 of 11
How are held-to-maturity securities reported on the balance sheet?
B. Fair value with unrealized gains reported as a separate component of stockholders' equity and unrealized losses included in earnings
C. At amortized cost
A. Fair value with unrealized gains and losses reported as a separate component of stockholders' equity
B. Fair value with unrealized gains reported as a separate component of stockholders' equity and unrealized losses included in earnings
C. At amortized cost
User Contributed Comments 8
| User | Comment |
|---|---|
| Alfa1 | Don't understand this. shouldn't the unrealized gains be counted as as earnings as stated in the notes? |
| Claudio | No Alfa1: they are not shor-term liquid assets! |
| frenchfurt | held-to-maturity Sec. could be held either as long term invt or as short term invt. It is not the question. when held as short term, such Sec are recorded at cost and valued on the balance sheet at cost adjusted for the effects of interest.(Needles,Powers,p334) |
| Ali1 | I guess in held to maturity investments it is irrelevant whether or not fair market value exceeds the cost, because you have no intentions on realising the potential gain or loss. A bond held to maturity pays you a certain amount(assuming no default) regardless of what the price is compared to the market |
| warrentend1 | Held-to-maturity securities are recorded at the amortzed cost and unrealized holding gains/losses are not recognized |
| mrushdi | Here the intention is the factor. |
| quanttrader | held for trading and held for sale are reported at fair value, whilst held for maturity reported at amoritized |
| SRI2010 | As mrushdi mentioned, intention is the factor. A way to look at this is, regardless of the fluctuations in price, the gain or loss is never going to be realized anyway since it is held to maturity. |
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Learning Outcome Statements
explain the financial reporting and disclosures related to financial instruments
CFA® 2025 Level I Curriculum, Volume 2, Module 3.