美國CPA模擬試題：有價證券（七）

On July 2, Year 1, Wynn, Inc., purchased as an available-for-sale security a $1,000,000 face value Kean Co. 8% bond for $910,000 plus accrued interest to yield 10%. The bonds mature on January 1, Year 7, and pay interest annually on January 1. On December 31, Year 1, the bonds had a market value of $945,000. On February 13, Year 2, Wynn sold the bonds for $920,000. In its December 31, Year 1, balance sheet, what amount should Wynn report for available-for-sale investments in debt securities?

a. $910,000

b. $920,000

c. $950,000

d. $945,000

Explanation

Choice "d" is correct. The security would be recorded at fair value on July 2, Year 1, or $910,000. Accrued interest is a receivable and does not affect cost. The $90,000 discount is not amortized on short-term investments. On December 31, Year 1, the investment would be adjusted to fair value, $945,000. The unrealized holding gain of $35,000 would be reported as a separate component of other comprehensive income.

Choice "a" is incorrect. The investment would be recorded at cost on July 2, Year 1 or $910,000. However, the investment would reflect fair value as of December 31, Year 1.

Choice "b" is incorrect. $920,000 reflects the fair value of the investment on the date it was sold, not 12/31/Year 1. The investment is short-term.

Choice "c" is incorrect. The accrued interest of $40,000 at 12/31/Year 1 would be recorded as interest receivable, not as part of the investment account.