Book Value of Equity change, equity

mdfb79

Does the book value of equity change when we reclassify trading securities to available-for-sale?

hassan

nopes - both are already carried at Market values

bkballa

but even if they’re both recorded at market value, isn’t there still a difference in equity?
The book value would be biased because if the investment was a trading security, its unrealized gain for example, would increase income, and the effect of this investment after tax would should up in Equity. However, if the investment was considered available-for-sale, its unrealized gain would be recognized directly in Equity, without the tax deduction.
The difference would be the tax paid on the investment, therefore incorrectly stating the book value of equity. What am I doing wrong?

ftwcfa

I think unrealized g/l in other comprehensive income for the avail-for-sale security would be net of tax.

JustasS

I think they are as well (net of tax) even tho I’ve never come across an example where it made you deduct the tax