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

question 21

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 that have not already been recognized 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:

Simple Rate

Simple Rate often refers to a straightforward percentage or rate applied in calculations without complications such as tiering or compounding.

New Machine

Refers to the acquisition of a new piece of equipment or machinery intended to increase productivity or efficiency in a manufacturing or operational process.

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.

Investment

The allocation of resources, such as capital, time, and effort, in something to earn a return or achieve a goal.