homework 11-15-3.docx - Classification of Investments The following investments occurred in 2018 for Mole Company Required 1 Classify each investment as

homework 11-15-3.docx - Classification of Investments The...

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Classification of Investments The following investments occurred in 2018 for Mole Company. Required: 1. Classify each investment as either held-to-maturity, trading, available-for-sale, or an equity method investment. a. Mole purchased 5% of the common stock on Brandon Company, a business which has a history of paying large quarterly dividends. Mole wishes to hold the securities for the forseeable future in order to receive these dividends. Trading b. Mole purchased a bond that will mature in 10 years. Mole purchased this bond because it expects that over the next 6 months, interest rates will fall, causing the bond price to increase. At that time, Mole plans
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Unformatted text preview: to sell the bonds to earn a profit. Trading c. Mole purchased $100,000 of Wilson Company's convertible bonds. Mole has no intention of converting the bonds or selling the debt in the near future. Availabl d. Mole purchased 30% of the common stock in a supplier in an effort to have more input into the quality of the raw materials it receives. Equity m e. Mole purchased bonds for Collier Company with a face value of $100,000 for $95,000. The bonds pay interest of 8% semiannually. Mole has the ability and intent to hold the bonds to maturity and collect the principal and interest. Held-to-Feedback...
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