httpspostimgorgimage69zb1g9ujSolution Answer a Trading Secur

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Solution

Answer a. Trading Securities Because the Company purchased the bonds with the intention of selling it next month (when there is increase in price) or near future, so classify as Trading Securities. Answer b. Available for sale securities. Because when the company has no intention to sale in near future or not holding its securities till its maturity it will be classify as Available for Sale Securities. When the compoopany acquired total of 30% of stock, then it must use equity method of accounting for the above stock Answer c. Trading Securities Because the bonds are not purchased at the time of issue of bonds and they are mature in less than 1 year, they are short term securities and classify as Trading Securities. Answer d. Available for sale securities. Because the company does not know how long it will hold a security. It will may sale the securities before its maturity, it must be classify as Available for Sale Securities. Answer d. Available for sale securities. Because the company wants to hold a security for a longer period and its does not have maturity date, it must be classify as Available for Sale Securities. Answer e. Held to Mature securities. Because the company has a intention to hold the bonds till its mature, so classify as held to Mature Securities.