available for sale securities question, interest, regarding, available, understand

towardsutopia21

I am a little confused regarding the impact of avaliable for sale securities on the income statement and shareholders equity..

As I understand any unrelaized gains/loss for the avaliable for sale securities is recorded as a part of comprehensive income (shareholders equity) and DOES NOT affect the income statement... However the dividends or interest gained from these are reported on the income statement... Is this correct?

I came across a question in one of the mock exams which asked which of the following is a part of comprehensive income but not income statement
a) Unrealized gains and losses on available for sale
b) Unrealized gains and losses on foreign exchange
c) something i dun remember

The answer was given as B... Isnt this question a lil ambiguoes as even A can be the case if we consider the reporting like I have stated above for the available for sale securities?


Sorry about the long convoluted question .. Can someone clarify this?

Kiakaha

vnnvnn Wrote:
-------------------------------------------------------
> Agree with disiz64:
>
> IFRS makes distintion between unrealised gains and
> losses on Ava-F-S debt securties that arise due to
> exchange rate movements and requires these changes
> in value to be recognized in income statement,
> whereas US GAAP does not make this distintion,
> (page 632 reading 42)


then still, the answer is not B or ?

mnieman

AFS unrealized gain/loss shd go directly to OCI

are u sure that the correct question and proposed choices ?
Wasn't it smthg like "the least likely" ?

kamara5

Agree with disiz64:

IFRS makes distintion between unrealised gains and losses on Ava-F-S debt securties that arise due to exchange rate movements and requires these changes in value to be recognized in income statement, whereas US GAAP does not make this distintion, (page 632 reading 42)

dotamasta

Under IFRS, unrealized gains or losses on available-for-sale securities that arises from foreign exchange currency movements don't bypass the IS.

Penny-wenny

check page 638 Exhibit 1 of the CFA module . All loud and clear

Matori

Caramel28 Wrote:
-------------------------------------------------------
> check page 638 Exhibit 1 of the CFA module . All
> loud and clear


I don't think I will have time to check that could you please brief what is the verdict? I think I agree with these guys that there is some problem with the question itself.

Flok

Held of Trading - Fair Value - Unrealized --> Income Statement
Available for Sale - Fair Value - Unrealized --> Other Compr.
Held till Maturity - Book Value - Unrealized --> Not Reported. (Unless sold and then it is a realized g/l)

I found alot of 3rd Party Mocks to have some errors...

Ionutzakis

Ya sorry about that.. I meant translation losses only.. Bu i am confused about the available to sale securities part..

shootingstar

This doesn't sound right.....unrealized G/L on AFS securities should go straight to other comprehensive income.

Also, I don't think that all unrealized gains/losses on FX bypasses the income statement. I think its only "FX translation gains/losses", meaning FX gains made if a US Company had a Chinese factory and adjusted the year-end profits back to US dollar. If it were just the Company's FX gains/losses based on normal operations (i.e. buying overseas inventory or something) it would flow through the income statement....can anyone clarify?