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Chapter 12: Q21. (page 610)

Where on the asset side of the balance sheet are debt investments classified as trading securities, available-for-sale securities, and held-to-maturity securities reported? Explain.

Short Answer

Expert verified

Trading securities are reported under the current asset on the balance sheet. Available-for sale and held-to-maturity securities are classified as current or non-current.

Step by step solution

01

Definition of debt investment

Debt investment means investing in a large share of debt of a company for the view of high interest.

02

Balance sheet reporting

In the balance sheet, trading securities come under the head of current assets because the holding period of trade securities is very less. Available-for-sale securities are included in a current asset or non-current asset. It all depends on the maturity period of the debt security. Held-to-maturity securities are also included in the balance sheet as a current asset or non-current, mainly depending on the maturity period of the securities.

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