If Dinsburry Company Concluded That an Investment Originally Classified as a Trading

question 113

Multiple Choice

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:

• A)not reclassify the investment, as original classifications are irrevocable.
• B)reclassify the investment as held to maturity and immediately recognize in net income all unrealized gains and losses as of the reclassification date.
• C)reclassify the investment as held to maturity and treat the fair value as of the date of reclassification as the investment's amortized cost basis for future amortization.
• D)reclassify the investment as held to maturity, but there would be no income effect.

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Definitions:

Sphenoid Bone

A complex bone at the base of the skull that supports the brain, forms part of the eye socket, and contains the sphenoidal sinuses.

Olecranon Process

The bony projection of the ulna at the elbow, which forms the point of the elbow and serves as an attachment for muscles of the forearm.

Ulna

A bone in the forearm that is located on the side opposite to the thumb, playing a key role in the movement of the wrist and elbow.

Intervertebral Disk

A structure located between the vertebrae in the spine, acting as a shock absorber and allowing flexibility.