Response to the following problem:
Reporting securities available-for-sale; obtain and critically evaluate an annual report
Investments in common stocks potentially affect each of the various financial statements as well as the disclosure notes that accompany those statements.
Required:
1. Locate a recent annual report of a public company that includes a disclosure note that describes an investment in securities available-for-sale. You can use EDGAR at www.sec.gov .
2. Under what caption are the investments reported in the comparative balance sheets? Are they reported as current or noncurrent assets?
3. Are realized gains or losses reported in the comparative income statements?
4. Where are unrealized gains or losses reported in the comparative financial statements?
5. Under what caption are unrealized gains or losses listed in the comparative balance sheets? Why are unrealized gains or losses reported here rather than in the income statements?
6. Are cash flow effects of these investments reflected in the company's comparative statements of cash flows? If so, what information is provided by this disclosure?
7. Does the disclosure note provide information not available in the financial statements?