Held-to-maturity security : The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities. Available-for-sale (AFS) securities : These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk. To indicate : The effect of electing fair value option for a held-to-maturity security and available-for-sale security

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Answer 1

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Chapter 12, Problem 12.12Q

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

To indicate: The effect of electing fair value option for a held-to-maturity security and available-for-sale security

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What is the fair value option? Where do companies thatelect the fair value option report unrealized holdinggains and losses?

Explain how electing the fair value option affects accounting for investments.

Describe the accounting for the fair value option.

Answer 2

Question

Chapter 12, Problem 12.12Q

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

To indicate: The effect of electing fair value option for a held-to-maturity security and available-for-sale security

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Answer 3

Question

Chapter 12, Problem 12.12Q

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

To indicate: The effect of electing fair value option for a held-to-maturity security and available-for-sale security

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Answer 4

Question

Chapter 12, Problem 12.12Q

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

To indicate: The effect of electing fair value option for a held-to-maturity security and available-for-sale security

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Answer 5

Chapter 12, Problem 12.12Q

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

To indicate: The effect of electing fair value option for a held-to-maturity security and available-for-sale security

Answer 6

Chapter 12, Problem 12.12Q

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

To indicate: The effect of electing fair value option for a held-to-maturity security and available-for-sale security

Answer 7

Chapter 12, Problem 12.12Q

To determine

Held-to-maturity security: The debt securities which are held by the investor with an intent to hold the investment till its maturity, are referred to as held-to-maturity securities.

Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

To indicate: The effect of electing fair value option for a held-to-maturity security and available-for-sale security

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 12 - All investments in debt securities are classified...Ch. 12 - When market rates of interest rise after a...Ch. 12 - Does GAAP distinguish between fair values that are...Ch. 12 - When a debt investment is acquired to be held for...Ch. 12 - Prob. 12.5Q Ch. 12 - What is comprehensive income? Its composition...Ch. 12 - Why are holding gains and losses treated...Ch. 12 - Prob. 12.8Q Ch. 12 - Prob. 12.9Q Ch. 12 - Prob. 12.10Q

Solution Summary: The author explains the effect of electing fair value option for held-to-maturity and available-for-sale securities.

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