available-for-sale

(adjective)

securities that do not qualify as "held-to-maturity" or as a "trading security"

Related Terms

Examples of available-for-sale in the following topics:

  • Assessing Fair Value

    • Companies must calculate the fair market value for these available for sale securities at the end of each subsequent accounting period.
    • A company initially records the "available for sale securities" at cost.
    • Using the fair value method, available for sale investment with unrealized gains and losses recognized in net income should have:
    • A company initially records the "available for sale securities" at cost.
    • Explain why a company calculates the fair market value of available for sale securities

  • Average Cost Method

    • Under the Average Cost Method, It is assumed that the cost of inventory is based on the average cost of the goods available for sale during the period.
    • Note that we compute weighted average cost per unit by dividing the cost of units available for sale, $690, by the total number of units available for sale, 80.
    • The average cost is computed by dividing the total cost of goods available for sale by the total units available for sale.
    • On 12/31/12, Furniture Palace has cost of goods available for sale (beginning inventory and purchases) of USD 5,000; 200 units available for sale; sales of 50 units; and an ending inventory of 150 units.
    • On 12/29/12, Furniture Palace has beginning inventory of $5,000 and 200 units available for sale.

  • Accounting for Sale of Debt

    • How debt sales are recorded depends on whether the debt is classified as "held-to-maturity," "a trading security," or "available-for-sale".
    • In the case of an available-for-sale asset, the following journal entry should be made in the following accounts:
    • This is because, unlike trading securities, the loss from an available-for-sale security is not expected to be realized in the near future.
    • Debt securities can be classified as "held-to-maturity," a "trading security," or "available-for-sale. "
    • Summarize how to record the sale of a held-to-maturity, trading security and available for sale debt

  • Gross Profit Method

    • Calculate the cost of goods available for sale as the sum of the cost of beginning inventory and cost of net purchases.
    • Gross profit ratio equals gross profit divided by sales.
    • Calculate the cost of ending inventory as the difference of cost of goods available for sale and estimated cost of goods sold.
    • Furniture Palace has cost of goods available for sale of $5000.
    • Sales were $1000.

  • Methods in Retail Inventory

    • For some companies, taking a physical inventory is impossible or impractical so the Retail Inventory Method is used to estimate.
    • The steps for finding the ending inventory by the retail inventory method are:
    • Divide the cost of goods available for sale by the retail price of the goods available for sale to find the cost/retail price ratio.
    • Deduct the retail sales from the retail price of the goods available for sale to determine ending inventory at retail.
    • Here a woman is checking stock of certain items to maintain an accurate record for dollars of inventory in stock.

  • Key Considerations for the Statement of Cash Flows

    • It provides information about a company's borrowing and debt repayment activities, the company's sale and repurchase of its ownership securities, and other factors affecting the company's liquidity and solvency.
    • Cash inflows include cash receipts from sales of goods or services; interest received from making loans; dividends received from investments in equity securities; and cash received from the sale of securities that were held for trading purposes, issued by other businesses.
    • Securities that are held for trade are generally investments that a business holds for a very short period of time with the intent to sell for a quick gain.
    • Transactions include the sale and acquisition of property, plant, and equipment; the collection and granting of long-term loans to others; and the trading of available-for-sale and held-to-maturity securities of other businesses.
    • An available-for-sale security is an investment that does not qualify as "held-to-maturity" or "trading".

  • Selecting an Inventory Method

    • The company sold one unit for USD 2,800.
    • For these items, use of any other method would seem illogical.
    • On 12/30/12, a sale of Product X is made for 11 units
    • On 12/30/12, a sale of Product X is made for 11 units.
    • On 12/31/12, Furniture Palace has cost of goods available for sale of USD 5,000; 200 units available for sale; sales of 50 units; and an ending inventory of 150 units.

  • Inventory Turnover Ratio

    • ., Dun & Bradstreet) use sales as the numerator instead of the cost of sales.
    • The cost of sales yields a more realistic turnover ratio, but it is often necessary to use sales for purposes of comparative analysis.
    • The cost of sales is considered to be more realistic because of the difference in which sales and the cost of sales are recorded.
    • Sales are generally recorded at market value, which is the value at which the marketplace paid for the good or service provided by the firm.
    • However, the cost of sales is recorded by the firm at what the firm actually paid for the materials available for sale.

  • Fair Value Method

    • The ownership of less than 20% creates an investment position carried at historic book value or fair value (if available for sale or held for trading) in the investor's balance sheet.
    • In accounting, fair value (also knows as "fair market value") is used as a certainty of the market value of an asset (or liability) for which a market price cannot be determined (usually because there is no established market for the asset).
    • This is used for assets whose carrying value is based on mark-to-market valuations; for assets carried at historical cost, the fair value of the asset is not used.
    • Opinions on value are always based upon subjective interpretation of available information at the time of assessment.
    • Other examples of sales that would not meet the test of fair market value include a liquidation sale, deed in lieu of foreclosure, distressed sale, and similar types of transactions.

  • Recognition of Revenue at Point of Sale or Delivery

    • Since most sales are made using credit rather than cash, the revenue on the sale is still recognized if collection of payment is reasonably assured.
    • The accrual journal entry to record the sale involves a debit to the accounts receivable account and a credit to the sales revenue account; if the sale is for cash, the cash account would be debited instead.
    • The revenue earned will be reported as part of sales revenue in the income statement for the current accounting period .
    • For goods shipped under FOB destination, ownership passes to the buyer when the goods arrive at the buyer's receiving dock; at this point, the seller has completed the sales transaction and revenue has been earned and is recorded.
    • A street market seller recognizes revenue when he relinquishes his merchandise to a buyer and receives payment for the item sold.