Explain how to account for available-for-sale debt securities at and after acquisition and how they are reported in financial statements.
What will be an ideal response?
Available-for-sale debt securities are recorded at cost when purchased. After acquisition they are reported on the balance sheet at their fair values with any unrealized holding gains or losses shown in the equity section of the balance sheet. Gains and losses realized on the subsequent sale of these investments are reported in the income statement.
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a. True b. False Indicate whether the statement is true or false
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