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

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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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.

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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 - Prob. 12.1Q 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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