Classify each investment as either held$-$to$-$maturity, trading, available$-$for$-$sale, minority passive equity investment, or minority active investment.

a$.$Mole purchased a bond that will mature in $10$ years. Mole purchased this bond because it expects that over the next $6$ months, interest rates will fall, causing the bond price to increase. At that time, Mole plans to sell the bonds to earn a profit.

Available$-$for$-$saleHeld$-$to$-$maturityMinority active $($equity method$)$ investmentMinority passive equity investmentTrading

b$.$Mole purchased $$100,000$ of Wilson Company's convertible bonds. Mole has no intention of converting the bonds or selling the debt in the near future.

Available$-$for$-$saleHeld$-$to$-$maturityMinority active $($equity method$)$ investmentMinority passive equity investmentTrading

c$.$Mole purchased $30\%$ of the common stock in a supplier in an effort to have more input into the quality of the raw materials it receives.

Available$-$for$-$saleHeld$-$to$-$maturityMinority active $($equity method$)$ investmentMinority passive equity investmentTrading

d$.$Mole purchased bonds for Collier Company with a face value of $$100,000$ for $$95,000.$ The bonds pay interest of $8\%$ semiannually. Mole has the ability and intent to hold the bonds to maturity and collect the principal and interest.

Available$-$for$-$saleHeld$-$to$-$maturityMinority active $($equity method$)$ investmentMinority passive equity investmentTrading

e$.$Mole purchased $5\%$ of the common stock of Brandon Company, a business with a history of paying large dividends. Mole wishes to hold these securities for the forseeable future in order to receive these dividends.

Available$-$for$-$saleHeld$-$to$-$maturityMinority active $($equity method$)$ investmentMinority passive equity investmentTrading

$2.$ Discuss the basis upon which the classification of each debt investment is based.

The classification of debt securities into held$-$to$-$maturity, trading, and available$-$for$-$sale categories is based on

fair market valueliquiditymanagement intent

$.$ This

maywill not

create an inconsistency in the application of GAAP.