Business Finance Homework Help

You have just joined a CPA firm. This is your first time working with the client.
The client has asked for help in reporting some securities, and the audit
manager on the job has asked you for recommendations on the reporting.

Provide a 400-600 words report that includes your recommendations on reporting, and its effect on carrying value and earnings in each of the following situations:

1. The client has an equity security that has declined in value (i.e., the market
     value is less than what he or she paid for it [cost]). It is currently
     classified as available-for-sale, but the client would like to
     change its reporting to a trading security.

1. The client has a combination of investments in a portfolio that are long-term
        investments. The portfolio has increased in value on the whole, but there
        is one stock whose value has fallen by more than 60%. The client thinks
        that this decline in value is permanent.
2. The client has a portfolio of trading securities that has dropped 20% in
        value. He or she has another portfolio that is available-for-sale and its
        fair value has increased by 40%.