The Way Health Care Organizations Treat Investments - Essay Example

Trading securities are equity and debt securities that are principally purchased for sale in the short term. They represent loans received. The security holder is entitled to repayment of principal and receiving of interest payments. Equity securities reflect ownership of interest and trading securities get a fair value report (Finkler, 2010). For the available-for-sale securities, they are reported at fair value. Their income excludes the unrealized losses and gains. They are reported as separate equity part that does not affect the year’s net income.

On the other hand, not-for-profit healthcare organizations have all debts and equity reported at fair value (Finkler, 2010). A change in the net assets includes losses and gains. These gains and losses are reflected in the unrestricted net assets unless a donor or law prohibits it. An important feature is that all debt securities are depicted at fair value inclusive of those considered held to maturity by the former group.  In this category, the focus is not on net income; however, importance is vested in the total available resources. This makes the inclusion of gains or losses in the net income to be nonexistent.