The effect of SFAS No. 115 on financial statement analysis

The impact that SFAS 115, Accounting for Certain Debt and Equity Securities, can have on the way financial statements are presented is examined. SFAS 115 requires that investment securities be categorized in one of 3 classifications (that is, trading, available for sale, and held to maturity), and t...

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Bibliographic Details
Published in:The Ohio CPA journal 1996-12, Vol.55 (4), p.32
Main Authors: Ivancevich, Daniel M, Cocco, Anthony F, Ivancevich, Susan Hermanson
Format: Article
Language:English
Subjects:
Accounting
Accounting and auditing
Accounting procedures
Analysis
Balance sheets
Classification
Deferred income taxes
Differences
Earnings per share
Effects
Equity
Fair market value
Fair value
FASB statements
Financial accounting standards
Financial statement analysis
Financial statements
Interest rates
Investments
Net income
Net losses
Ratios
Securities
SFAS 115
Tax rates
Trends
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Summary:The impact that SFAS 115, Accounting for Certain Debt and Equity Securities, can have on the way financial statements are presented is examined. SFAS 115 requires that investment securities be categorized in one of 3 classifications (that is, trading, available for sale, and held to maturity), and these classifications result in different valuation for securities. Under SFAS 115, two companies with identical securities could appear quite different in terms of financial statement representation depending upon how management decides to categorize the securities. These differences in financial statement representation can impact financial statement ratios and may, in turn, affect investment and credit decisions.
ISSN:0749-8284