Inter corp investment investment, previously, security, equity, where

dirk01

2 questions to clarify treatment:

In Held to maturity- where are unrealized G/L put?

After a security is sold and the G/L is realized, do you remove previously noted Comp Inc from Shareholder equity? That is if they ask what happens to ROE when a gain is relaized...

zhaoyp

HTM securities have gains/losses (realized or not) reported through the I/S.

AVS has the gains/losses reported through OCI then when sale is made a cumulative gain or loss is reversed out of Equity and re-classified on the IS.

yospaghetti

mbolzicco u sure?

Prior to maturity, only thing regarding HTM that goes into I/S is interest income. They are recorded as amortized cost on the B/S.
If you sell it for a gain, the realized gain goes to I/S just like mbolzicco says.

unrealized g/l is not really accounted for under HTM



Edited 1 time(s). Last edit at Saturday, May 28, 2011 at 01:25PM by passme.

DSquaredSlim

ok 99.9% of HTM assets are Debt... hence the term carried at amortized cost.

so, every period your balance sheet value going down by the amount amortized (regardless of its fair value)

your P&L impact is simple the interest income you receive for the period (i.e. coupon)


the confusion probably comes from some of the EOC questions where the actual amount to get the answer is not amortized (I assume this is because they don't tell you what the amortization for the period is), in this case assume the value as of the time of purchase

I hope this clarifies

- Guille

eoin

mbolzicco is talking about held for trading, not held for maturity.

b_sea93

Not really :-) HFT is not mentioned in this thread

- Guille