A Debt Security Is Transferred from One Category to Another

question 42

Multiple Choice

A debt security is transferred from one category to another. Generally acceptable accounting principles require that for this particular reclassification (1) the security be transferred at fair value at the date of transfer, and (2) the unrealized gain or loss at the date of transfer currently carried as a separate component of stockholders' equity be amortized over the remaining life of the security. What type of transfer is being described?

• A) Transfer from trading to available-for-sale
• B) Transfer from available-for-sale to trading
• C) Transfer from held-to-maturity to available-for-sale
• D) Transfer from available-for-sale to held-to-maturity

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Definitions:

Actual Costs

The real costs incurred for materials, labor, and overhead in the production of goods or provision of services.

Maintenance Department

A division within a company or facility dedicated to the care, repair, and upkeep of equipment, machinery, and the physical plant.

Operating Divisions

Distinct units within a company, often based on products or markets, responsible for their own performance and strategy.

Variable Costs

Expenses that vary in direct proportion to changes in the level of an organization's activity or volume of output.