Question

Prior to the 2018 effective date of accounting for minority passive equity investments, investments in stock securities designated by the investor to be held for the long-term are classified as:______

Answer 1

Answer: available-for-sale securities

Explanation: Debt or equity securities bought by the investing public are classified as either held to maturity, held for trading, or available for sale. Available-for-sale securities (AFS) is used to describe and classify financial assets and are defined as such securities (debt or equity) that are bought with the purpose of selling before they reach maturity or holding it for a long period should it not have a maturity date and are reported at fair value. Changes in the value of such securities are recorded as unrealized gain or loss in other comprehensive income.

Answer 2

available-for-sale securities.

Step-by-step explanation:

Available-for-sale securities are this e that are purchased by an investor to for the purpose of selling before the maturity date. They are usually reported at fair value, gains and losses are recorded as comprehensive income in the equity section of the balance sheet.

Securities include held-till-maturity securities, trade securities, and available-for-sale securities.

For example if an investor buys shares of $5,000 with expectation it will rise in value before year end, and them sells the share off when they appreciate to $7,000. The investor is practicing available-for-sale securities.