Fisher Corporation has the following investments at September 30, 2012: What method of accounting will Fisher use to account for its investment in Brooke, if this investment is classified as held to maturity?

Question

Fisher Corporation has the following investments at September 30, 2012:  What method of accounting will Fisher use to account for its investment in Brooke, if this investment is classified as held to maturity?

Quizplus · Accepted Answer

Held to maturity securities are required to be accounted for using the amortized cost method, where the initial cost of the investment is adjusted for any premiums or discounts and then amortized over the life of the security. This method is used to calculate interest income and the investment is reported at its amortized cost on the balance sheet.

Fisher Corporation Has the Following Investments at September 30, 2012