reclassification adjustments on the face of the financial statement in
which comprehensive income is reported, or it may disclose reclassification
adjustments in the notes to the financial statements.
133. This appendix provides illustrations of the calculation of
reclassification adjustments for Statement 115 available-for-sale
securities. Illustration 1 is of available-for-sale equity securities, and
Illustration 2 is of available-for-sale debt securities. The illustrations
are intended as examples only; they do not represent actual situations.
134. Illustrations 1 and 2 involve a nonpublic enterprise that follows the
practice of recognizing all unrealized gains and losses on available-for-
sale securities in other comprehensive income before recognizing them as
realized gains and losses in net income. Therefore, the before-tax amount
of the reclassification adjustment recognized in other comprehensive income
is equal to, but opposite in sign from, the amount of the realized gain or
loss recognized in net income.
Illustration 1: Statement 115 Available-for-Sale Equity Securities
135. The available-for-sale equity securities in this illustration
appreciate in fair value. On December 31, 1997, Enterprise purchased 1,000
shares of equity securities at $10 per share, which it classified as
available for sale. The fair value of the securities at December 31, 1998
and December 31, 1999 was $12 and $15, respectively. There were no
dividends declared on the securities that were sold on December 31, 1999.
A tax rate of 30 percent is assumed.
Calculation of Holding Gains
Before Income Net of
Holding gains recognized in other
Year ended December 31, 1998 $ 2,000 $ 600 $ 1,400
Year ended December 31, 1999 3,000 900 2,100
Total gain $ 5,000 $ 1,500 $ 3,500
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Amounts Reported in Net Income and Other Comprehensive Income
for the Years Ended December 31, 1998 and December 31, 1999