Which of the following is the best description of investments in available-for-sale securities?
A) Investments in bonds that management intends to hold to maturity.
B) Investments in stocks or bonds that are held primarily for the purpose of selling them in the near future.
C) Investments in more than ﬁfty percent of the voting stock of another company.
D) Investments in securities that are accounted for under the market value method other than trading securities and held-to-maturity investments.

Question

Quizplus · Accepted Answer

Available-for-sale securities are investments in stocks or bonds that a company plans to hold for a period of time, but not necessarily to maturity or for immediate sale. They are accounted for using the market value method, distinguishing them from trading securities (which are intended for short-term profit) and held-to-maturity investments (which are bonds the company intends to hold until they mature). Unlike investments in more than fifty percent of the voting stock of another company, which would typically be accounted for using the equity method or consolidation, available-for-sale securities are marked to market with unrealized gains or losses reported in other comprehensive income.

Which of the Following Is the Best Description of Investments