Classification of Investments The following investments occurred in 2019 for Mole Company.

Required: 1. Classify each investment as either held-to-maturity, trading, available-for-sale, minority passive, or minority active investment.

a. Mole purchased a bond that will mature in 10 years. Mole purchased this bond because it expects that over the next 6 months, interest rates will fall, causing the bond price to increase. At that time, Mole plans to sell the bonds to earn a profit.

b. Mole purchased $100,000 of Wilson Company's convertible bonds. Mole has no intention of converting the bonds or selling the debt in the near future.

c. Mole purchased 30% of the common stock in a supplier in an effort to have more input into the quality of the raw materials it receives.

d. Mole purchased bonds for Collier Company with a face value of $100,000 for $95,000. The bonds pay interest of 8% semiannually. Mole has the ability and intent to hold the bonds to maturity and collect the principal and interest.

e. Mole purchased 5% of the common stock of Brandon Company, a business with a history of paying large dividends. Mole wishes to hold these securities for the forseeable future in order to receive these dividends.

2. Discuss the basis upon which the classification of each debt investment is based. The classification of debt securities into held-to-maturity, trading, and available-for-sale categories is based on . This create an inconsistency in the application of GAAP.

3. How would these investments be classified under IFRS? The application of the equity method is under IFRS. IFRS classification for debt investments include: , through other comprehensive income, as well as through profit and loss.