Asked by Mandrell Little on Jun 06, 2024
Verified
Long-term investments in debt securities not classified as trading or held-to-maturity securities are classified as available-for-sale securities.
Debt Securities
Financial instruments indicating a debt owed by the issuer to the holder, typically in the form of bonds, bills, or notes.
Available-for-sale Securities
Financial assets not classified as held-to-maturity or trading securities, and can be sold in the market.
- Comprehend the categorization and documentation of various securities within the balance sheet.
- Distinguish between the accounting methods for long-term investments in debt and equity securities.
Verified Answer
CQ
Camryn QuickJun 09, 2024
Final Answer :
True
Explanation :
Long-term investments in debt securities that are not classified as trading or held-to-maturity securities are classified as available-for-sale securities under GAAP (Generally Accepted Accounting Principles). Available-for-sale securities are reported at fair value on the balance sheet, with any unrealized gains or losses reported in other comprehensive income until the securities are sold or impaired.
Learning Objectives
- Comprehend the categorization and documentation of various securities within the balance sheet.
- Distinguish between the accounting methods for long-term investments in debt and equity securities.
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