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gizmo_the_mogwai [7]
3 years ago
7

On December 31, Year 1, Ott Co. had investments in marketable debt securities as follows: Amotized Cost Market value Mann Co. $1

0,000 $8,000 Kemo, Inc. $9,000 $10,000 Fenn Corp. $11,000 $9,000 $30,000 $27,000 The Mann investment is classified as held-to-maturity, while the remaining securities are classified as available-for-sale. Ott does not elect the fair value option for reporting financial assets. Ott's December 31, Year 1, balance sheet should report total marketable debt securities as
Business
1 answer:
Ahat [919]3 years ago
7 0

Answer:

$29,000

Explanation:

The Held-to-maturity securities to be carried at amortized cost

The available-for-sale & trading securities to be carried at fair value (FV).

Therefore, the investment portfolio is reported at the following amounts:

Mann Co.   $10,000 (Cost)

Kemo, Inc.  $10,000 (Fair value)

Fenn Corp. $9,000 (Fair value)

Total           $29,000

So, Ott's December 31, Year 1, balance sheet should report total marketable debt securities as $29,000

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Debt investments not classified as trading or held-to-maturity securities are called available-for-sale securities.
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It is completely inappropriate to mention that debt investments not classified as trading or held-to-maturity securities are called available-for-sale securities. Therefore, the statement given above is false.

<h3>What is the significance of debt investments?</h3>

Investments in the loan instruments or similar classes are regarded as debt investments. These investments cannot be bought or sold or traded in the open market, as unlike equity investments, they are backed by a date of maturity.

Therefore, the statement given above regarding the significance of debt investments is false.

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CHECK THE EXPLANATION.

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