Final answer:
Debt investments on a balance sheet are classified based on intent and duration: Trading securities are current assets, available-for-sale can be current or non-current, and held-to-maturity are non-current assets.
Step-by-step explanation:
On the balance sheet, debt investments are categorized based on their purpose and the intended duration of the investment. Trading securities are reported on the asset side of the balance sheet as current assets because they are meant to be bought and sold for short-term profit. In contrast, available-for-sale securities might be classified as either current or non-current assets depending on the company's intent to sell them within the operating cycle. However, they are often listed in a separate section from trading securities since they are not necessarily expected to be sold in the short term. Lastly, held-to-maturity securities are reported as non-current assets because they represent investments that the company intends to hold until they mature. These classifications reflect the company's investment strategy and the liquidity of the assets. Trading securities are readily marketable and are valued at fair market value due to their high liquidity. Available-for-sale securities are also marked to market, but they are not intended for active trading like trading securities. Held-to-maturity securities are recorded at amortized cost and are not subject to fair value adjustments since they are meant to be kept until they mature.