Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. company x accounted for its portfolio of investmen

Company X accounted for its portfolio of investments in marketable securities at historical cost. The...

50.1K

Verified Solution

Question

Accounting

Company X accounted for its portfolio of investments in marketable securities at historical cost. The company invested primarily in long-term, liquid financial instruments (typically five-year bonds). Although he expected that a large portion of its portfolio would be held until the bonds matured, the CEO wanted to set aside the remainder as ready to be sold at any time. Indeed, adverse events triggering losses could occur any day, and the company needed to maintain a certain level of liquidity to meet immediate cash needs.

Question How would you account for the companys marketable securities?

See Exhibit 2 for price data on a 100,000-bond representative of the company's investments.

image

Exhibit 2 Market Price for Five-Year AAA Prime Credit Bond, Representative of Tokyo AFM's Holdings 108 106 104 102 100 98 Dec. 31,2000: 100 Dec. 31, 1996: 105 Dec. 31, 1998:101 96 94 92 90 Dec. 31, 1997:98 Dec. 31, 1999:95 88 1

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students