Question

. During 20X9, Alpha Co. purchased debt securities classified as trading securities. At the end of 20X9, the market value of Alpha’s investment in debt securities exceeded the amortized cost. Alpha should report the debt securities on its 20X9 balance sheet at

Multiple Choice

a. Amortized cost

b. Market value

c. Cost

d. Lower of cost or market

Answer 1

Answer:

b. Market value

Explanation:

Alpha' Co's trading securities are considered as cash equivalent item and recorded as current assets in the balance sheet, because of its short maturity period. The market value of securities should be reported on the balance sheet as on the year end of Alpha Co. So, Correct answer is Alpha should report the debt securities on its 20X9 balance sheet at Market value.