What Are The Different Types Of Securities

Question

The XYZ’s available-for-sale and held-to-maturity securities were included in the following captions in our consolidated balance sheets (in millions):

 

December 31, 2011

December 31, 2011

December 31, 2010

December 31, 2010

 

Available-for-Sale Securities

Held-to-Maturity Securities

Available-for-Sale Securities

Held-to-Maturity Securities

Cash and equivalents

$       --

$   112

$       --

$   110

Marketable securities

5

1

5

1

Other investments, principally bottling companies

986

--

471

--

Other assets

410

--

9

--

 

$1,401

$   113

$   485

$   111

Required:

a. Explain the difference between “Held-to-maturity securities,” “Available-for-sale securities,” and “Trading securities.”

b. What amount does XYZ Company report for available-for-sale securities on its balance sheets at December 31, 2011, and 2010? How are these values measured?

c. What are the net unrealized gains (losses) on available-for-sale securities for 2011 and 2010?

d. How did these unrealized gains (losses) on available-for-sale securities affect the company’s reported income in 2011?

e. What is the difference between realized and unrealized gains and losses? Are realized gains and losses treated differently in the income statement than unrealized gains and losses?

Summary

The question belongs to Finance and it deals with various questions such as the difference between various securities, measuring the values of securities, unrealized gains and the difference between unrealized gains and losses. These questions have been answered in detail in the solution.

Total Word Count 394

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