Through the investment maze: making the transition to SFAS 115

FASB Statement 115 on accounting for debt and equity securities was recently issued. Our experience, in talking with practicing CPAs, has indicated that Statement 115 offers little assistance for making the transition from Statement 12 to Statement 115. Even though CPAs are looking for additional guidance, we have discovered nothing in the literature that comprehensively addresses the transition question. Three tables in this paper were specially designed to guide the reader through the transition process. We begin by illustrating the elements of investment accounting under Statement 12. This illustration is then discussed from the perspective of the new Statement 115 reporting. To aid the CPA, a coding procedure is described and used for preparing the transition journal entries. The design of the tables and the coding structure are the key elements in this manuscript. (Reprinted by permission of the publisher.)
Because 1994 was the year the new standard on accounting for investment securities was adopted, business executives and accountants will need to give immediate attention to this change in financial [...]