Accounting for Investments

To begin, read the following scenario:

You are the controller for a corporation that owns several investments in debt securities, mainly in 10-year bonds. You know that each long-term investment must be classified as either a held-to-maturity or available-for-sale security. This current year, market interest rates for similar bonds rose sharply, which caused the fair market value of the portfolio to decline substantially. You also know that the corporation does not intend to hold the 10-year bonds it currently owns to maturity. Additionally, each year you earn a bonus which is based on a percentage of net income.

In your initial post, describe the criteria you would use to classify the 10-year bonds. Be sure to elaborate your response by explaining your reasoning. Also, assess whether or not the classification of these investments would affect your annual bonus in any way.