QUESTION #$1(12$ Marks, $24$ Minutes$)$

The article "Financial Instruments Navigating New Waters" states that "Fair value is the most relevant measure for financial instruments and the only relevant measure for derivative financial instruments."

Required:

What would be the most appropriate classification$($s$)$ for the following investments made by a company and how would they be measured each Balance Sheet date and why?

Government Investment Certificates, mature March $30,2007$

Shares in public company ABC acquired to invest excess cash for a future construction project

$$500,000,6\%$ bonds of Utilities Limited to mature October $31,2010$ unless cash is required for operations

Shares $(30\%)$ in public company Innovation Incorporated acquired to ensure access to new technology

Derivative $($not part of a hedge$)$

What is the tainting provision? Explain fully.