Running head: SIGNATURE ASSIGNMENT: CODIFICATION RESEARCH PAPER
Signature Assignment: Codification
Research Paper
ACC/423
, 2
SIGNATURE ASSIGNMENT: CODIFICATION RESEARCH
PAPER
When is the fair value of security is “readily determinable”
FASB states that a security`s fair value is identified as readily available if it attains the
following requirements. The bid and bid asked quotations or sales prices have to be available on
security exchange identified by the securities exchange commission (SEC). A Fair value of
security should be in a structure equal to common fund or in an investment in mutual fund for it
to be determinable (Young, 2012). Fair value of a security transacted in external market is
readily available if its scope and breadth are comparable to U.S markets.
Basing the argument on the above explanation regarding when a security is readily
determinable, Teton shares may be readily available even if they do not trade on one of the large
stock markets. This is because; they may be registered with security exchange commission thus
making them readily determinable because they meet one of the above requirements.
How an impairment of a security is accounted for
Securities are determined as impaired only if their fair value is below their amortized cost
during the presentation date. If a company has an impaired security, it has to consider if the
impairment is other than temporary (OTTI). In order to determine this, the company has to state
if it intends to issue the security by considering all the available evidence such as approval of
security sale, directing the agent to vend the security etc.
According to FASB (2017) impairment is determined as other than temporary in the
existence of the following circumstances; the intention of a company to vend security; If it is
likely that the firm is going to be asked to sell the debt equity prior to its amortized cost recovery
Signature Assignment: Codification
Research Paper
ACC/423
, 2
SIGNATURE ASSIGNMENT: CODIFICATION RESEARCH
PAPER
When is the fair value of security is “readily determinable”
FASB states that a security`s fair value is identified as readily available if it attains the
following requirements. The bid and bid asked quotations or sales prices have to be available on
security exchange identified by the securities exchange commission (SEC). A Fair value of
security should be in a structure equal to common fund or in an investment in mutual fund for it
to be determinable (Young, 2012). Fair value of a security transacted in external market is
readily available if its scope and breadth are comparable to U.S markets.
Basing the argument on the above explanation regarding when a security is readily
determinable, Teton shares may be readily available even if they do not trade on one of the large
stock markets. This is because; they may be registered with security exchange commission thus
making them readily determinable because they meet one of the above requirements.
How an impairment of a security is accounted for
Securities are determined as impaired only if their fair value is below their amortized cost
during the presentation date. If a company has an impaired security, it has to consider if the
impairment is other than temporary (OTTI). In order to determine this, the company has to state
if it intends to issue the security by considering all the available evidence such as approval of
security sale, directing the agent to vend the security etc.
According to FASB (2017) impairment is determined as other than temporary in the
existence of the following circumstances; the intention of a company to vend security; If it is
likely that the firm is going to be asked to sell the debt equity prior to its amortized cost recovery
