When an investment in an available-for-sale debt security is transferred to trading because the company anticipates selling the security in the near future, the carrying value assigned to the investment upon entering it in the trading portfolio should be:

Question

Ethan Rush

Business

3 January, 18:31

When an investment in an available-for-sale debt security is transferred to trading because the company anticipates selling the security in the near future, the carrying value assigned to the investment upon entering it in the trading portfolio should be:

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Madyson Brooks · Answer 1

When an investment in an available-for-sale debt security is transferred to trading because the company anticipates selling the security in the near future, the carrying value assigned to the investment upon entering it in the trading portfolio should be its fair value at the date of the transfer.

Explanation:

There will be a lot of varied investments included in the trading portfolio. There can be a different kinds of trading portfolio which an investor can own and can have varied strategies of investment. It can be a stock, currency, cash, futures, etc.

When any company makes a decision in selling the securities during any time in future, the investment in available-for-sale debt security can be transferred to trading. The carrying value corresponding to that investment must have its fair value at the date of the transfer when it is transferred to the trading portfolio.