Taking stock on the Internet.If your company or client is required to track the current market value of securities it owns, then you know what an irksome, time-consuming task that can be. But now, with the help of the Internet, the Internet, the, international computer network linking together thousands of individual networks at military and government agencies, educational institutions, nonprofit organizations, industrial and financial corporations of all sizes, and commercial enterprises task can be accomplished almost automatically. Under Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Statement no. 115, Accounting for Certain Investments in Debt and Equity Securities, businesses must account for the securities in their financial statements. Using two computer tools--the Internet and spreadsheet software--you can do the job with little more than a few mouse clicks. Statement no. t15 applies to all investments in debt and equity securities with readily determinable Liable to come to an end upon the happening of a certain contingency. Susceptible of being determined, found out, definitely decided upon, or settled. determinable adj. fair values. (For more details, see "FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). 115: It's Back to the Future for Market Value Accounting" JofA, Sept.93, page 49.) It requires companies to classify clas·si·fy tr.v. clas·si·fied, clas·si·fy·ing, clas·si·fies 1. To arrange or organize according to class or category. 2. To designate (a document, for example) as confidential, secret, or top secret. all securities investments that are not accounted for under the equity method into three categories: trading, available for sale or held to maturity. On top of that, companies must use a market value approach to account for investments held for trading or available for sale. Under that approach, companies must periodically adjust their investments to fair market value. A valuation allowance account is then used to adjust investments in securities to market value on the balance sheet. The primary difference between accounting for investments held for trading and accounting for available-for-sale investments is that any holding gain or loss to adjust the investment to market value is shown on the income statement for trading shares, while available-for-sale stocks' accumulated holding gains or losses are reported as a separate component of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. on the balance sheet. LET'S GO Let's Go may refer to: Television
While the Internet has several portfolio programs--America Online, for example, has a popular one--we selected one developed by Ethos Corp. This site allows a company to create, at no charge, a customized portfolio list of stocks and mutual funds, and all prices are updated automatically. When needed, this information can be imported into a spreadsheet template that generates accounting information in compliance with Statement no. 115. An. example spreadsheet template, together with instructions on how to access this information service and transport the data, is detailed below. We chose to work with Microsoft's Excel 5.0 for Windows. However, with some modification to the parsing See parse. parsing - parser technique, a template of this type can be used in any popular spreadsheet. There are two worksheets in this template: Trading Stock (see exhibit 1, below), which contains the formulas, and the parsing worksheet in which you paste market information copied from the Internet. The only column in which you enter data directly is labeled Allowance at 12/31/95. Here you enter the valuation allowance for the previous year. The other columns contain formulas that retrieve information from the parsing page. To get the latest market information, tap into the Internet and go to http://www.irnet.com/pages/login.htp. This Web page (exhibit 2, above) asks for a login Signing in and gaining access to a network server, Web server or other computer system. The process (the noun) is a "login" or "logon," while the act of doing it (the verb) is to "log in" or to "log on. name and a password. If you are new to this Web page and do not have a login name and password, pull up the screen that invites you to join at no charge. After entering a unique login/password combination, press the button labeled SUBMIT, which brings up a screen (see exhibit 3, above) that asks you to customize either a stock or mutual fund portfolio. After selecting one, you are presented with a screen (exhibit 4, page 43) that invites you to enter each security;s symbol, the quantity and the purchase price. BOOKMARK A stored location for quick retrieval at a later date. Web browsers provide bookmarks that contain the addresses (URLs) of favorite sites. Most electronic references, large text databases and help systems provide bookmarks that mark a location users want to revisit in the future. THE ADDRESS Each login/password combination entitles you to obtain market information for up to 15 stocks and 15 mutual funds. Companies can track additional securities simply by registering under different login/password combinations. Each time you enter a line on your portfolio, press the UPDATE button. This will refresh (1) To continuously charge a device that cannot hold its content. CRTs must be refreshed, because the phosphors hold their glow for only a few milliseconds. Dynamic RAM chips require refreshing to maintain their charged bit patterns. See vertical scan frequency and redraw. the screen, adding the stock or mutual fund to your portfolio. You can now bookmark the address of this page in your Web browser The program that serves as your front end to the Web on the Internet. In order to view a site, you type its address (URL) into the browser's Location field; for example, www.computerlanguage.com, and the home page of that site is downloaded to you. for later retrieval. The 10-stock portfolio in exhibit 4 shows, in addition to the data you entered, the total original purchase price, per-unit and total current market price, today's change in market value and total change in value of the investment. This information must now be converted into spreadsheet-readable data. When you need to prepare a report, select the range of information to copy to the Windows clipboard A reserved section of memory that is used as a temporary holding area for data that is copied or moved from one application to another using the copy and paste and cut and paste (move) menu options. Each time you transfer something into the clipboard, the previous contents are deleted. (by pressing Ctrl C or by going through the Edit menu The Edit menu is a menu found in most computer programs that handle files, text or images. It is often the second menu in the menu bar, next to the file menu. It most commonly contains commands relating to the handling of information, i.e. ). Then load the spreadsheet application, retrieve the template and go to the parsing page. With the cursor (1) The symbol used to point to some element on screen. On Windows, Mac and other graphics-based screens, it is also called a "pointer," and it changes shape as it is moved with the mouse into different areas of the application. positioned in cell Al, paste the entire contents of the clipboard. The result, with unparsed data, should look like exhibit 5, page 43. Then, to parse the data, move your mouse arrow to the Excel menu and click on Data, Text to Columns and Finish. This sequence of mouse clicks parses the strings copied to column A into the appropriate columns so the information can be retrieved by the formulas on the Trading Stock page. The results of parsing are shown in exhibit 6, below. Now return to the Trading Stock page for the updated results (see exhibit 7, below). This same procedure can be followed for tracking stocks or mutual funds that are available for sale. Exhibit 7 contains the completed schedule using the Internet information. The schedule contains the original cost of the investment, the current market value of the investment, the current valuation allowance account balance needed to adjust the investment account to market, last year's valuation allowance account balance, this period's gains or losses and the accumulated gains and losses on the investments. Those using Lotus 1-2-3 for Windows would enter all the same formulas as the ones shown for Excel. However, when parsing in Lotus, highlight the data to be parsed and then, on the. Lotus main menu, click on Range, Parse, Create and OK. The valuation allowance account adjusts the investment account on the balance sheet to market. The difference between last year's valuation allowance balance and this year's balance is this period's holding gain or loss, which would be reported on the income statement for trading stock. For example, in this case the holding gain for 1996 is $1,350. Because the periodic gains or losses are reported on the income statement and included in retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. , the accumulated gain or loss balances are not reported for trading stock. The accumulated gain or loss accounts are reported in stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. for available-for-sale stock. For example, if the stocks were all available for sale, the company would report a net holding gain of $2,450 ($2,800--$350) in stockholders' equity at the end of 1996. Still, companies need to maintain accumulated gain or loss accounts for trading stock to account for stocks reclassified to available-for-sale stocks. Companies can use one portfolio to account for all investments in stock (trading and available for sale) and then separate out these shares at the end of the period. Or they can develop separate portfolios for trading and available-for-sale stocks. As you can see, the Internet is a valuable tool. It's beginning to revolutionize rev·o·lu·tion·ize tr.v. rev·o·lu·tion·ized, rev·o·lu·tion·iz·ing, rev·o·lu·tion·iz·es 1. To bring about a radical change in: Television has revolutionized news coverage. 2. the way organizations do business and the way accountants do their work. CPAs should be prepared to take advantage of the Internet--for both their own work and for their clients and employers. EXECUTIVE SUMMARY * COMPANIES THAT MUST APPLY Financial Accounting Standards Board Statement no. 115, Accounting for Certain Investments in Debt and Equity Securities, can use the Internet and spreadsheet software to do the job most efficiently. * AN INTERNET WEB PAGE OFFERS, at no charge, up-to-the-minute prices of securities in customized portfolios. That information, when imported into a spreadsheet template, can generate the accounting information that complies with Statement no. 115. * TWO WORKSHEET TEMPLATES are used: One is for the formulas and the other is a parsing sheet, into which you paste market information copied from the Internet. * TO GET THE LATEST MARKET information, tap int6 the Internet and go to http://www.irnet.com/pages/login.htp. Users are allowed a maximum of 15 stocks and 15 mutual funds for each login name. Companies can track additional stocks and mutual funds simply by registering under different login/password combinations. * THE INTERNET IS BEGINNING TO revolutionize the way organizations conduct business and the way accountants perform their professional work. CPAs should be prepared to take full advantage of the Internet--for both their own work and for both their clients and employers. TERRY J. WARD, CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , PhD, is an associate professor of accounting at Middle Tennessee State University Middle Tennessee State University (founded September 11, 1911, and commonly abbreviated as MTSU) is an American university located in Murfreesboro, Tennessee. in Murfreesboro, Tennessee Murfreesboro is a city in Rutherford County, Tennessee, United States. According to the 2007 census estimate the city had a total population of 92,559. It is the county seat of Rutherford CountyGR6. . JON WOODROOF, CPA, PhD, is an assistant professor of accounting at the same university. |
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