Long Term Securities Paper 6

In 2009, Osgood Corporation purchased $4 million in ten-year municipal bonds at face value. On December 31, 2011, the bonds had a market value of $3,600,000 and Osgood reclassified the bonds from held to maturity to trading securities. Osgood’s December 31, 2011, balance sheet and the 2011 income statement would show the following:

On January 1, 2011, Rupar Retailers purchased $100,000 of Anand Company bonds at a discount of $5,000. The Anand bonds pay 6% interest but were purchased when the market interest rate was 7% for bonds of similar risk and maturity. The bonds pay interest semi-annually on January 1 and July 1 of each year. Rupar accounts for the bonds as a held-to-maturity investment, and uses the effective interest method. In Rupar’s December 31, 2011 journal entry to record the second period of interest, Rupar would record a credit to interest revenue of:

If Dinsburry Company concluded that an investment originally classified as a trading security would now more appropriately be classified as held to maturity, Dinsburry would:

Securities that are purchased with the intent of selling them in the near future to take advantage of short-term price changes are classified as:

The income statement reports changes in fair value for which type of securities?

Trading securities are most commonly found on the books of:

For trading securities, unrealized holding gains and losses are included in earnings:

Which of the following types of bonds is most likely to maintain a constant market value?