ADM3340A Fall 2008 Student Name Suggested Solution Quiz #1 Student ID: ______________________________ Question 1 For each situation below, indicate how the investment would be classified by the investor. Assume none of the investments are classified as held for trading upon initial recognition by the investor. a) Investment in $1,000,000 of 12 year bonds, intended to be held to maturity. Another investment in bonds, intended to be held to maturity, was sold last year because interest rate fluctuations made the market price attractive. See CICA HB 3855.83 below: See also the bottom paragraph of the textbook’s (4thedition) page 585. b) Common shares are bought in a small, family-owned business. The investor is the only non-family shareholder, but sits on the family-owned Board. The investor also allows the company to use patented processes for a fee, a right not granted to any other company, and provides $5,000,000 in long-terms loans to the company. Significant influence.
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