Accounting Research

In: Business and Management

Submitted By banme20
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Keller Graduate School of Management
Accounting 540: Accounting and Auditing Research
Professor: Michael Abner
Course Project Week 6
April 11, 2015

Abstract
In week 6 assignment, I will write a short essay to sum up my recommendation and conclusion about my finding to present to my client, the director of ABC Investment Group. Since the Director has a limited understanding the US GAAP regarding Debt security, therefore I have to be concise in my presentation.

ABC Investment Group is an investment company, and they deal with debt security. Their main concerns are how to recognize and record the transaction on unrealized gains/losses in their holding debt securities, and when they should write down debt securities. The key to the problem lies on how the ACB Investment Group treat their investment. According to FASB ASC 320-10-25 the debt securities are classified in three groups as Trading Security (TD), Available For Sale (AFS), and Held To Maturity (HTM); and each class of debt investment has different accounting method to recording its transaction. Trading Security uses the Fair Value method in account for the gains/losses, and this debt security is the most active portfolio to the company because the objective of this portfolio is to generate profit in a short term by participating in the buying and selling of debt securities. When unrealized gains/losses for trading securities are recognized, they need to record as an earning in income statement, and trading securities will be treated as a current asset in the balance sheet of the company. Available For Sale (AFS): like trading security, AFV also use the Fair Value method in recognize any unrealized gains/losses as it occurs in the recording period. Unlike the trading security, Unrealized gains/losses on AFS shall no record as earning in income statement instead the unrealized gains/losses…...

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