(Financial Statement Effect of Equity Securities) Presented below are three unrelated situations involving equity securities.
Situation 1
An equity security, whose fair value is currently less than cost, is classified as available for sale but is to be reclassified as trading.
Situation 2
A noncurrent portfolio with an aggregate fair value in excess of cost includes one particular security whose fair value has declined to less than one half of the original cost. The decline in value is considered to be other than temporary.
Situation 3
The portfolio of trading securities has a cost in excess of fair value of $13,500. The available for sale portfolio has a fair value in excess of cost of $28,600.
Instructions
What is the effect upon carrying value and earnings for each of the situations above?