AssignmentCase Study: Bartlett Financial Services Company.Write a 5 page paper on the following topic utilizingat least 5 scholarly journal article references:Bartlet Financial Services Company...

Bartlet Financial Services Company
Student Name
11th Jan 2023
The Bartlet Financial Services Co. manages a sizable investment portfolio made up of stock and debt instruments. The total fair value of the portfolio as of Dec 31, 2014, exceeded its whole cost. Some securities have seen their value improve while others have seen their value decline. Since each classification has a different impact on the financial statements, the first categorization of securities is crucial.
When management intend to keep an asset until it matures, they designate it as a long-term non-trading security with the held-until-maturity classification. Till the security is sold, any changes in value do not need to be disclosed. Because it is simple to forecast how the classification will affect net income, managers frequently employ it. Securities that are held to maturity are likewise reported as amortized costs, and interest is reported when it is received. Short-term investments in trading securities are made by a corporation with the goal of making a profit; they are valued at fair market value, with gains and losses shown on the statement of income. Profits and losses also are reported when sold, along with interest that is earned. Securities that are offered for sale are recorded at fair value but are accounted for in comprehensive income. Gains or losses from sales are also documented, as well as interest that is generated. Companies utilize the available-for-sale categorization when they do not plan to hold the security until it matures but do not actively trade it either (Crane & Dyson, 2011).
Steven Orpurt elaborated on the categorization of securities by pointing out that accounting for investments can include playing games. The value of trading securities changes every day because they are subject to market volatility. This poses a problem since it could result in a sudden drop in net income due to the value of a security. In order to increase income, managers may also decide to sell a significant quantity of securities immediately before the end of the year. Orpurt illustrates this point with the example of Sony. Sony under pressure to demonstrate a profit in 2013. Sony experienced relatively modest gains on the selling of securities in the two years before. Sony only declared a profit on the selling of securities worth 671 million yen in 2012, but they reported a gain of 41,781 million yen in 2013, allowing them to demonstrate a profit in that year (Orpurt, 2016).
The finance vice president of Bartlet Financial Services Co., Deb Faust, proposes dividing securities by value changes into long-term non-trading securities and trading securities for those that have gained in value. In order to keep the...