Sean is in the business of buying and selling stocks and bonds. He has a bond of Green Corporation for which he paid $200,000. T

Question

3 years ago

9

Sean is in the business of buying and selling stocks and bonds. He has a bond of Green Corporation for which he paid $200,000. T

he bond is currently worth only $50,000. Discuss whether Sean can take a $150,000 loss for a bt1siness bad debt or for a worthless security.

Business

1 answer:

zlopas [31] · Answer 1 · 2022-05-29T04:54:59+03:00

Answer:

Sean can not either realize the bond as the loss as business bad debt or as a worthless security.

Explanation:

- Whether Sean can take the bond as the loss as business bad debt? Sean can't take the bond as the loss as business bad debt because the bond is a security whose value is dropping because of various risks such as market risks, credit risks. There is no certain information given the bonds are going to be default.

- Whether Sean can take the bond as the loss as worthless security? Sean can't take the bond as the loss as worthless security because the security is still worthy ($50,000 each). Loss, in this case, is only realized when bonds is sold or completely worthless.