a. Usual objectives underlying the holding of both current and noncurrent portfolios
of securities are:
Current—for temporary investments of excess cash in highly liquid investments.
Noncurrent—for investment income, appreciation value, control purposes of
another entity, or to secure sources of supplies or avenues of sales.
b. Securities should be classified as follows: Trading securities are always
classified as current. Held-to-maturity securities are classified as noncurrent,
except for the reporting period immediately prior to maturity. Available-for-sale
securities are classified as current or noncurrent based on management’s intent
regarding sale. Influential securities are noncurrent unless their sale is imminent.
Marketable securities that are temporary investments of cash specifically
designated for special purposes such as plant expansion or sinking fund
requirements are classified as noncurrent.
Unrealized losses on trading securities (which are classified as current assets)
are the only unrealized losses to flow through the income statement. Unrealized
losses on noncurrent investments (and current investments in available-for sale
securities) are included as a separate component of shareholders' equity. Some
analysts treat much if not all of these