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XYZ Company has just acquired 5,000 of the 5% bonds of RST Corporation, a major supplier for XYZ. XYZ plans to hold the bonds until
XYZ Company has just acquired 5,000 of the 5% bonds of RST Corporation, a major supplier for XYZ. XYZ plans to hold the bonds until they mature, unless the market rate improves considerably, in which case they would sell them to make a more profitable investment. a. How should XYZ classify this debt investment? b. How will XYZ report income/(loss) from this investment on its financial statements?
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