Question

An investment in an available-for-sale security is transferred to trading because the company anticipates selling the stock in the near future, the carrying value assigned to the investment upon entering it in the trading portfolio should be

Answer 1

Answer:

It's fair value at the date of the transfer

Explanation:

Transfers of securities between categories of investments should be accounted for at FAIR VALUE, with unrealized holding gains or losses treated in accordance with the nature of the transfer.

Available-for-sale securities are reported at fair value; changes in value between accounting periods are included in accumulated other comprehensive income in the equity section of the balance sheet.

The fair value option gives companies the option to report most financial instruments at fair value with all gains and losses related to changes in fair value reported in the income statement.