GAAP says that if a company owns bonds, even if it intends to hold those bonds until they mature, it must use fair value to account for them, and must show any holding gains or losses in income each year.

Question

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GAAP allows for bonds to be classified as "held-to-maturity" investments, in which case they can be accounted for at amortized cost rather than fair value, and do not require annual gains or losses to be shown in income.

GAAP Says That If a Company Owns Bonds, Even If