Reference no: EM132887808
Problem - Classification of Investments - The following investments occurred in 2019 for Mole Company.
a. Mole purchased a bond that will mature in 10 years. Mole purchased this bond because it expects that over the next 6 months, interest rates will fall, causing the bond price to increase. At that time, Mole plans to sell the bonds to earn a profit.
b. Mole purchased $100,000 of Wilson Company's convertible bonds. Mole has no intention of converting the bonds or selling the debt in the near future.
c. Mole purchased 30% of the common stock in a supplier in an effort to have more input into the quality of the raw materials it receives.
d. Mole purchased bonds for Collier Company with a face value of $100,000 for $95,000. The bonds pay interest of 8% semiannually. Mole has the ability and intent to hold the bonds to maturity and collect the principal and interest.
e. Mole purchased 5% of the common stock of Brandon Company, a business with a history of paying large dividends. Mole wishes to hold these securities for the forseeable future in order to receive these dividends.
Required - Classify each investment as either held-to-maturity, trading, available-for-sale, minority passive, or minority active investment.