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Cascade Company

In:

Submitted By Hunter24
Words 576
Pages 3
TO: Cascade Company
SUBJECT: Available for Sale Securities
DATE: February 18, 2012
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Cascade Company is looking into investing into Teton Co. and classifying theses shares as available for sale and has requested some information regarding this investment. With some research, it has been found that the fair value of Teton’s stock is readily determinable despite the fact that the stocks are not traded on one of the large stock markets. An issue that can arise sometime in the future from this security is an impairment and as long as the decline in fair value it is anything other than temporary, the fair value of the security can be written down. Also included in this memo is information concerning held to maturity securities and how rare sales and transfers of these securities should be disclosed in financial statements. The rest of the memo will expand on the above points.

Readily Determinable Fair Value of Securities
According to Financial Accounting Standards Board Codification (FASB), the fair value of the Teton stock is readily determinable. An equity security is readily determinable if it meets the following condition; the sales prices or bid-and-asked quotations must be available with a securities exchange that is currently registered with the Securities Exchange Commission. If the sales price or quotations are available in the over-the-counter market, the stocks are also considered readily determinable as long as the over-the-counter market is publicly reported by the National Association of Securities Dealers Automated Quotations or by the National Quotation Bureau. Since the Teton shares are traded on an over-the-counter market, the fair value of the stock is readily available.

Accounting for Impairment of a Security
To account for the impairment of a security, the company has to

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