Question

Sunland Company owns the following investments:
Trading securities (fair value) $151500
Available-for-sale securities (fair value) 69500
Held-to-maturity securities (amortized cost) 95000
Sunland will report investments in its current assets section of:______.
a. $0.
b. exactly $160,000.
c. $160,000 or an amount greater than $160,000, depending on the circumstances.
d. exactly $230,000.

Answer 1

Answer:

No option is correct, since only trading securities are must always be included as current assets and they are worth $151,500 (not even close to $160,000).

The correct answer would be:

• $151,500 or an amount greater than $151,500, depending on the circumstances.

Explanation:

trading securities are always reported as current assets

available for sale securities can be reported as current assets if the company expects to sell them in the current period (less than one year)

held to maturity securities can only reported as current assets if the securities mature within one year