Long-term investments in held-to-maturity debt securities are accounted for using the:
A)Market value method with market adjustment to income.
B)Market value method with market adjustment to equity.
C)Cost method with amortization.
D)Cost method without amortization.
E)Equity method.

Question

Quizplus · Accepted Answer

According to the question, the investments are held-to-maturity debt securities, which means that the intention of the investor is to hold them until maturity. In this case, these investments are accounted for using the cost method with amortization. The amortization reflects the effective yield of the investment over its life, and the cost is adjusted downwards for any impairment losses.

Long-Term Investments in Held-To-Maturity Debt Securities Are Accounted for Using