ACTG 351 Anne Surrey Investments Case

Due:

Wednesday, May 29 (at the beginning of class). Also, please be prepared to discuss the case and your solution in class on this date. Refer to the current, relevant accounting guidance to answer the questions on page 3 of the case.

Required:

Please be sure to reference the applicable professional guidance listed below. Your discussion should be typed, double-spaced and no more than 3 pages in length. Please prepare your case discussion in memo form (to Jim Beatty) addressing each of the questions.

Applicable Professional Pronouncements:   ASC 320-10-35: Investments – Debt and Equity Securities SAB 111: http://www.sec.gov/interps/account/sab111.htm

Instructions for accessing the FASB Codification database: 1. Go to http://aaahq.org/ascLogin.cfm 2. User ID: AAA52999 3. Password: Fgkb9em 4. Click on link to FASB Accounting Standards Codification (from American Accounting Association webpage) 5. Search on 320-10-35 (or access via topical drop down menu)

1

Jim Beatty is the CFO of Anne Surrey Inc., an investment company that primarily invests in common stocks of both public and private companies. Anne Surrey categorizes these investments as available-for-sale. At the end of fiscal year 2010, Jim is trying to determine whether some of the investments in the public stocks that Anne Surrey owns are other-thantemporarily impaired. On an aggregate basis, the company’s equity investments are in a net unrealized gain position. However, some of the investments in the portfolio are in a net unrealized loss position. The following table provides some information about the position of investments that are in a net unrealized loss position. Dollar amounts are in millions, except per share amounts.
December 31, 2010 Gross Unrealized Loss $ 208 702 280 258 920 Months of Highest Market Continuous Market Price Price