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ELN » Topics » (f) Investment securities and impairment

This excerpt taken from the ELN 20-F filed Feb 26, 2009.
(f) Investment securities and impairment
 
Marketable equity securities and debt securities are classified into one of three categories in accordance with the Financial Accounting Standards Board’s (FASB) Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” (SFAS 115), including trading, held-to-maturity, or available-for-sale.
 
  •  Marketable equity and debt securities are considered trading when purchased principally for the purpose of selling in the near term. These securities are recorded as short-term investments and are carried at fair value. Unrealized holding gains and losses on trading securities are included in other income. We did not hold any trading securities at December 31, 2008 and 2007.
 
  •  Marketable debt securities are considered held-to-maturity when we have the positive intent and ability to hold the securities to maturity. These securities are carried at amortized cost, less any impairment. We did not hold any held-to-maturity securities at December 31, 2008 and 2007.


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Table of Contents

 
Elan Corporation, plc
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
  •  Marketable equity and debt securities not classified as trading or held-to-maturity are considered available-for-sale. These securities are recorded as either short-term or long-term investments and are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive income/(loss) in shareholders’ equity/(deficit). The assessment for impairment of marketable securities classified as available-for-sale is based on established financial methodologies, including quoted market prices for publicly traded equity and debt securities.
 
Non-marketable equity securities are carried at cost, less write-down-for-impairments, and are adjusted for impairment based on methodologies, including the Black-Scholes option-pricing model, the valuation achieved in the most recent private placement by an investee, an assessment of the impact of general private equity market conditions, and discounted projected future cash flows.
 
The factors affecting the assessment of impairments include both general financial market conditions and factors specific to a particular company. In the case of equity classified as available-for-sale, a significant and prolonged decline in the fair value of the security below its carrying value is considered in determining whether the security is impaired. If any such evidence exists, an impairment loss is recognized.
 
This excerpt taken from the ELN 20-F filed Feb 28, 2008.
(e) Investment securities and impairment
 
Marketable equity securities and debt securities are classified into one of three categories in accordance with the Financial Accounting Standards Board’s (FASB) Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” (SFAS 115): including trading, held-to-maturity, or available-for-sale.
 
  •  Marketable equity and debt securities are considered trading when purchased principally for the purpose of selling in the near term. These securities are recorded as short-term investments and are carried at fair value. Unrealized holding gains and losses on trading securities are included in other income. We did not hold any trading securities at December 31, 2007 and 2006.
 
  •  Marketable debt securities are considered held-to-maturity when we have the positive intent and ability to hold the securities to maturity. These securities are carried at amortized cost, less any impairment. We did not hold any held-to-maturity securities at December 31, 2007 and 2006.
 
  •  Marketable equity and debt securities not classified as trading or held-to-maturity are considered available-for-sale. These securities are recorded as either short-term or long-term investments and are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive income/(loss) in shareholders’ equity/(deficit). The assessment for impairment of marketable securities classified as available-for-sale is based on established financial methodologies, including quoted market prices for publicly traded equity and debt securities.
 
Non-marketable equity securities are carried at cost, less write-down-for-impairments, and are adjusted for impairment based on methodologies, including the Black-Scholes option-pricing model, the valuation achieved in the most recent private placement by an investee, an assessment of the impact of general private equity market conditions, and discounted projected future cash flows.
 
The factors affecting the assessment of impairments include both general financial market conditions and factors specific to a particular company. In the case of equity classified as available-for-sale, a significant and prolonged decline in the fair value of the security below its carrying value is considered in determining whether the security is impaired. If any such evidence exists, an impairment loss is recognized.
 

EXCERPTS ON THIS PAGE:

20-F
Feb 26, 2009
20-F
Feb 28, 2008

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