Question

Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses and are included as other comprehensive income and as a separate component of stockholders' equity are:________.1. never-sell debt securities.

2. held-to-maturity debt securities.
3. trading debt securities.
4. available-for-sale debt securities.

Answer 1

4) available-for-sale debt securities.

Step-by-step explanation:

Available for sale debt securities are securities that can be sold in the future, but are included as other comprehensive income.

Option 1 is wrong because it's not a real term.

Option 2 is wrong because held to maturity debt securities are accounted for at amortized cost, not fair value, e.g. municipal bonds.

Option 3 is wrong because trading securities are recorded as current assets because the firm plans to trade them in the short term.