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Q1- For the following investments, identify whether they are: 1. Debt investments-held-for-collection. 2. Debt investments-held-for-collection and selling. 3. Debt investments-trading. 4. Trading equity investments. 5.
Q1- For the following investments, identify whether they are: 1. Debt investments-held-for-collection. 2. Debt investments-held-for-collection and selling. 3. Debt investments-trading. 4. Trading equity investments. 5. Non-trading equity investments. Each case is independent of the other. a. A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold. b. 10% of the outstanding shares of Farm-Co are purchased. The company is planning on eventually getting a total of 30% of its outstanding shares. c. 10-year bonds were purchased this year. The bonds mature at the first of next year, and the company plans to sell the bonds if interest rates fall. d. Bonds that will mature in 5 years are purchased. The company has a strategy to hold them to collect interest payments and principal of the bonds at maturity. e. A bond that matures in 10 years was purchased. The company is investing money set aside for an expansion project planned 10 years from now. f. Ordinary shares in a distributor are purchased to meet a regulatory requirement for doing business in the distributor's region. The investment will be held indefinitely
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