FASB 115: It's back to the future for market value accounting.

FINANCIAL Accounting Standards Board; STATEMENTS of standard accounting practice; ACCOUNTING standards; FINANCIAL instruments; DEBT; SECURITIES

The article presents information on the Financial Accounting Standards Board's (FASB) Statement no. 115, Accounting for Certain Investments in Debt and Equity Securities. It resembles both current accounting guidelines and various aspects of a proposal advanced by the American Institute of CPAs accounting standards executive committee several years ago. The statement was issued to address concerns about how entities account for financial instruments. It applies to all investments in debt securities and to equity securities with readily determinable fair values. It supersedes FASB Statement no. 12, Accounting for Marketable Securities. Statement no. 115 classifies securities into three categories: held to maturity, trading and available for sale. Debt securities qualify for the amortized cost method only if the investor has the ability and a positive intent to hold them to maturity. Positive intent is undermined if securities are sold in response to certain events but not others. In most situations, however, once a debt security is put in the held-to-maturity category, it generally cannot be sold or transferred to another category.