Final answer:
Rosa Company should recognize changes in the value of 'available-for-sale' debt securities in other comprehensive income, and reclassify to net income at the point of sale.
Step-by-step explanation:
When Rosa Company purchases debt securities and classifies them as "available-for-sale" securities, changes in the fair value of the investment should be recognized in other comprehensive income until the securities are sold. At the point of sale, any gains or losses are then reclassified from other comprehensive income to net income.
This approach reflects the intent of holding the investment for capital gains or to earn interest, rather than for active trading purposes.