Financial Reporting and Analysis Q119
119The following information is from a company’s investment portfolio:Investment
| Classification | Held-to-maturity |
| Market value, 31 Dec 2009 | $10,000 |
| Cost/Amortized cost 31 Dec 2009 | 12,000 |
| Market value, 31 Dec 2010 | 9,000 |
| Cost/Amortized cost 31 Dec 2010 | 10,000 |
If the investment is reclassified as available-for-sale as of 31 December 2010, the balance sheet carrying value of the company’s investment portfolio would
most likely:
most likely:
- Option : B
- Explanation : Held-for-trading and available-for-sale securities are carried at market value, whereas held-to-maturity securities are carried at amortized cost. If the investment is reclassified as available-for-sale in 2010, the carrying amount should be adjusted to its market value, which is $9,000. Compared with the amortized cost of $10,000, it is a decrease of $1,000.
