Libby Company Purchased Debt Securities for $100,000 and Classified Them

question 10

Multiple Choice

Libby Company purchased debt securities for $100,000 and classified them as available-for-sale securities on September 15,2019.At December 31,2019,the current fair value of the debt securities was $105,000.How should the investment be reported in the 2019 financial statements?

• A)The debt investment in available-for-sale securities would be reported on the balance sheet at its $100,000 cost.
• B)The $5,000 unrealized gain is reported within the income statement.
• C)The $5,000 realized gain is reported within the income statement.
• D)The debt investment in available-for-sale securities would be reported in the balance sheet at its $105,000 fair value and an unrealized holding gain on available-for-sale securities would be reported in the stockholders' equity section of the balance sheet.

---

Definitions:

Mathematical Talent

Exceptional ability or skill in understanding and solving mathematical problems.

IQ

An abbreviation for Intelligence Quotient, a score derived from standardised tests designed to measure human intelligence and cognitive abilities.

Mental Age

A measure of an individual's cognitive ability compared to the average cognitive ability of an age group.

IQ

Stands for Intelligence Quotient, a standardized score designed to measure human intelligence through various cognitive tasks and assessments.