DPC, an electric utility, has $100 million of bonds payable outstanding that mature in five years. The utility acquires U.S. government securities whose periodic interest payments and maturity value exactly equal those on the utility's outstanding bonds. The firm intends to use the cash received from the government bonds to make required interest and principal payments on its own bonds. The
electric utility could also have used its cash to purchase its bonds in the marketplace. Based on the above, DPC should treat these securities as
a. debt securities held as securities available-for-sale.
b. debt securities held as trading securities.
c. debt securities held to maturity.
d. equity securities held as trading securities.
e. equity securities held as securities available-for-sale.
C
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