American issued Accounting Standards Board standard (115) in 1993 entitled accounting for some investments in securities representing debts on the property rights of others, and that an alternative to the previous standard number (12). It is clear that it was the result of pressure from a number of organizations concerned with accounting information for the use of the concept of fair value accounting for some securities that represent equity or debt securities. And respect the standard accounting treatment for investments in securities which represent property rights (shares) and that have a fair value capable of immediate identification, and all investments in securities representing debts on others (bonds). And asks the standard classification of investments in securities when acquired into three types:
Securities held to maturity.
Securities of trafficking.
Securities available for sale.
At the other middle briefly review the accounting treatment required by the standard for each type of these three types:
4.1.1 securities kept to maturity:
This kind of investment in securities representing debts to third parties consists (such as bonds), it is required to have the entity invested firm intention and ability to hold to maturity. This is the kind of measure investment in securities on the basis of adjusted cost by the exhaustion of the premium, or discount deals with unrealized gains or losses, interest income and depletion of the premium or discount in the income statement.
4.1.2 securities of trafficking:
This includes the type of investment securities that represent ownership rights (shares) can determine the fair value immediately, or that represent debts to third parties (bonds) and the goal of possession resale in the short term through the purchase and sale of active and frequent operations to generate profit from differences price. It is measured this kind of investment in securities on the basis of fair value, and it appears as current in the balance sheet assets. And dealing with gains and unrealized losses, dividends, interest income and depletion of the premium or discount in the income statement. The standard does not distinguish in this case between gains and losses realized and unrealized.
4/1/3 securities available for sale:
This type of investment securities that represent ownership rights include fair value can be determined immediately, or that represent debts to third parties and not commensurate with the conditions of accession of the other two types. And the disclosure of this kind at fair value and addresses the net gains and unrealized losses in the separate component of equity elements in the statement of financial position (has been amended place to show under Standard No. (130) which provided for the show gains or losses are recorded in other comprehensive income components in income list). The realized gains and losses, dividends, interest and discount exhausted premium revenues are dealt with in the income statement.
It is clear from this category that the securities of trafficking are classified as current assets, while securities held to maturity are classified within non-current assets, except that mature in the coming year are classified as current assets. The securities available for sale financial Vicu Classification between current and non-current assets on an individual basis to show that mature or will be disposed of in the next year under current securities and other assets within non-current assets. When switching between the three types is done on a fair value basis, and dealt with gains and unrealized losses on a case by case basis.
If the conversion of securities trading, the gains or unrealized losses are within the income years in which these gains and unrealized losses occurred, it is modified, it is a direct recognition of the gains or unrealized losses in the history of the conversion if the conversion to stock of trafficking. When convertible bonds from securities held to maturity to securities available for sale are recognized as gains or losses are recorded in equity elements in the balance sheet, and are kept gains or losses are recorded in equity elements if the convertible bonds of securities available for sale to securities held to maturity, and are amortized over the life of the bonds in the same way used to extinguish the premium or discount.
Standard was touched to deal with other than temporary decline in the fair value of securities that are classified as securities.- available for sale or securities held to maturity. If found property that the fair value for the low cost is to be a temporary reduction in the cost of the securities to fair value at least. This shows the reduction in income or modify the new value in the case of improvement in the fair value of the security, but the increase or decrease in the fair value of securities available for sale are shown in equity as described above.
On the other hand select the standard of disclosure required three varieties to invest in securities. Benchmark was asked to disclose the total fair value, and gross unrealized gains and gross unrealized losses, and the basis of the discount cost of the main types of securities on the date of the balance sheet, and that of securities available for sale and vocabulary bonds that kept to maturity, has been cited criterion for this purpose types Home Securities. It must also disclose the specific maturity bonds classified information within the securities available for sale or securities held to maturity financial. In addition to the change in net unrealized gains or unrealized losses, which have been shown in equity components during the year, with respect to securities available for sale.
In the income statement Viaan disclosure:
1. The amounts resulting from the sale of stock available for sale, as well as the total realized gains and losses.
2. The basis for determining the cost for the purpose of calculating realized gains and losses (such as a way kind of excellence, medium or dispute).
3. Total Total gains and losses that have been recognized in the income when the conversion of securities available for sale to the securities of trafficking.
4. Change in net unrealized gains or unrealized losses, which joined as income during the year.
In addition to be disclosed adjusted cost exhaustion of premium or discount of securities sold or transferred, which ranked among the securities that are held to maturity, as well as gains or realized and unrealized losses relating thereto, and the circumstances that called for the sale or transfer of securities, within Notes The financial statements for each period is displayed the results of operations.
4/2 Standard No. (25) issued by the International Federation of Certified Public Accountants:
The International Federation of Certified Public Accountants issued Standard No. (25) in 1985 entitled "Accounting for Investments" to begin its work in 1987 and amended in 1991, was introduced in 1994 to keep pace with style review the current method pursued by the International Federation. It is clear from the title of the standard that deals with the accounting treatment and disclosure of all investments in specialized in the field of investment and non-specialized facilities. At first, the standard known as the origin of the investment held by the entity in order to increase wealth through distributions (interest, dividends, rent, and other revenues) or capital increases or other benefits in return property investors, such as those obtained through trade relations). This includes investment in its different forms, which are mostly in financial rights such as securities negotiable and which represent equity or debt to a third party or in the form of tangible assets such as investment in land, buildings or direct investment in commodities negotiable (gold, silver, diamond shape definition ).
And it asks the standard classification of investments to current and long-term investments traded so show up with long-term assets and investments with non-current assets if they are established in this way are classified as assets in the balance sheet. The enterprises that differentiate between current and non-current assets in the balance sheet should distinguish between current and long-term investments for the purposes of measurement after the acquisition.
And select the standard cost of investment that they include the purchase price plus all borne by the facility to get it, such as fees and commissions and dispute. In the case of access to investment in exchange for shares, bonds or other assets cost of the investment is calculated on the basis of the fair value of the shares, bonds or other assets version.
With regard to the assessment of investment in the balance sheet criterion has identified the following basis:
Current investments:
A - at market value, or
At cost or market, whichever is less.
If the calendar on the basis of cost or market, whichever is less, can determine the value of the total investment portfolio or the total investment of the items or investment groups.
Long-term investments:
Or - the cost.
Value after revaluation or
(C) in the case of securities negotiable, cost or market, whichever is less, and is applied to the portfolio in general.
In the case of the use of value-based after the calendar, are adopting a clear policy defines re-Times Calendar, and must re-evaluate Integrated Group for long-term investment at the same time. In the case of a permanent decline in value of the investment should be a long-term adjustment to the carrying value of the investment, and this is done on an individual basis for each vocabulary portfolio.
If you followed the established calendar basis traded investments at market value should adopt one of the two identified by standard methods to account for the increase and decrease in the carrying value and consistency it. Can the enterprise should:
A - acknowledging the increase or decrease the entrance or expense, Oob- make the increase in account payables in equity account surplus so-called re-Calendar. While making the decline in market value in excess Medina Calendar re-calculate the equivalent of the amounts made payable and belonging to the same investment. In other cases it deals with an expense reduction. In the case of increase for investment it had fallen in the past are recognized in income in the range of the previous decline.
This standard has been explained that the increase and decrease in long-term investments resulting from re Calendar treated the same way as mentioned in (b) above.
4/3 draft standard number (55) British:
Commission British accounting standards issued Project Standard No. (55) accounting for investments in 1990 to propose a standard accounting practice for the treatment of investments to identify and measure the performance of the enterprise in this area, providing information related to this activity for the benefit of users of financial statements. Thus, the criterion was the special topics in relation to the balance sheet project and check income and disclosure related to investments.
Draft standard has been known that investment out of him the ability to generate economic benefit in the form of property distributions and / or increase in value. Rated investment criterion to current and non-current, and the difference between the total within each viable investments for immediate trading and other non-immediate trading; and of course the proposed accounting treatment vary depending on the classification.
In the case of investments that are classified as current assets and be capable of immediate trading asks project standard measured on the basis of their market value and to recognize changes in the market value in the profit and loss account for the period without an association with the process of the actual sale of the investment. Draft standard are several reasons for this treatment have been reported, most notably that the securities negotiable way to store liquidity so represent moves in the market value of profits or losses for the period and to be recognized in the profit and loss account. The calendar on the basis of market value gives a better indication of the performance of the enterprise; it reflects the movements of the value of investments under its control, and provides market value also a more objective to measure the impact of decisions relating to the purchase of investment investments or disposed of during the period, and facility management is given the opportunity to manipulate the results of the performance period by the timing of decisions relating to the disposal of investments. Benchmark securities project has been singled out for trading immediate treatment on the basis of market value due to the reliability of the measurement in this case for the existence of an active market immediately to such investments. Messaging and trading means there is an active market for investment available and can be reached with a market value declared or other indicators managed to reach a market value.
The other investments classified as current assets and can not be shown at market value must be evaluated on the basis of cost or net realizable value or on the basis of the current cost and address the increase or decrease in value as surplus or recalibrate deficit, and recorded in the revaluation reserve account.
And investments that are classified with fixed assets based on their cost less impairment in this cost because the current market value is appropriate to measure their performance, because the facility does not intend to or can not get rid of them to achieve the increase in value, and as an alternative to this treatment can be re-evaluating these investments on periods - and re-propose the standard Calendar project annually - to show the present value and address the increase or decrease in the revaluation reserve account.
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