Cain Corporation Owns $10,000 of IBM Bonds

question 65

Multiple Choice

Cain Corporation owns $10,000 of IBM bonds. Some bonds are held for immediate sale, but others are held in terms of long-term appreciation. Which of the following is true about how Cain should account for this investment?

• A)Cain should account for all the bonds as FV-NI.
• B)Cain should account for all the bonds as FV-OCI.
• C)Cain should determine the primary business purpose of the bonds, and account for the bonds according to that purpose, as all of a particular type of debt should be accounted for the same way.
• D)Cain should determine the business purpose of each bond, and account for it according to that business purpose.

---

Definitions:

Benthic Zone

The ecological region at the lowest level of a body of water such as an ocean or a lake, including the sediment surface and some sub-surface layers.

Eutrophic

Describes water bodies rich in nutrients leading to dense plant life and algae growth, which can deplete oxygen levels and harm aquatic life.

Oligotrophic

Relates to bodies of water that have low nutrient levels and low productivity.

Algae

a diverse group of photosynthetic organisms that live in aquatic environments, ranging from unicellular microalgae to large seaweeds.