Lyrical Company Purchased Debt Securities for $500,000 and Classified Them

question 63

Multiple Choice

Lyrical Company purchased debt securities for $500,000 and classified them as trading securities on September 15,2019.On December 31,2019,the current fair value of the securities was $481,000.How should the investment be reported within the 2019 financial statements?

• A)The debt investment in trading securities would be reported in the balance sheet at its $481,000 fair value.
• B)The debt investment in trading securities would be reported in the balance sheet at its $500,000 cost.
• C)A realized holding loss on the debt trading securities would be reported on the income statement.
• D)The investment in debt trading securities would be reported in the balance sheet at its $481,000 fair value and a realized holding loss on the debt trading securities would be reported on the income statement.

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