John Corporation has three investments that are classified as noncontrolling. 1.A bond investment, purchased on Jan 1, 2014 and maturing on Dec. 31, 2020. They purchased them to help out the company and the interest income was quite high. 2. An investment in Mark Company stock, purchased on Dec. 1, 2014 because the price was low and John Corp. had some excess cash to invest. John Corporation\'s investment manager did not like taking risk or playing the market on an active basis. 3. An investment in 25% of the stock of Smith Company, a new customer who was experiencing management difficulties that affected their profitability. John Corp. intended to keep this investment for as long as it took to stabilize the company. Answer the following questions about these investments. 1. The investment in bonds should be classified as: Select one: a. held-to-maturity securities b. trading securities c. significant influence securities d. available-for-sale securities 2. The investment in Mark Company stock should be classified as: Select one: a. trading securities b. available-for-sale securities c. significant influence securities d. held-to-maturity securities 3. The investment in Smith Company stock should be classified as: Select one: a. held-to-maturity securities b. trading securities c. available-for-sale securities d. significant influence securities Solution Bonds are d. available-for-sale securities Reason is that they were bought to help out other company rather than making money out of it. Investment in Mark company is reffered to as d. held-to-maturity securities Investment in Smith Company is reffered to as d. significant influence securities as these stocks amount to 25%. Stock holing of 20 to 50% is refferef to as Significant influence securities. .

1. John Corporation has three investments that are classified as noncontrolling.
1.A bond investment, purchased on Jan 1, 2014 and maturing on Dec. 31, 2020. They purchased
them to help out the company and the interest income was quite high.
2. An investment in Mark Company stock, purchased on Dec. 1, 2014 because the price was low
and John Corp. had some excess cash to invest. John Corporation's investment manager did not
like taking risk or playing the market on an active basis.
3. An investment in 25% of the stock of Smith Company, a new customer who was experiencing
management difficulties that affected their profitability. John Corp. intended to keep this
investment for as long as it took to stabilize the company.
Answer the following questions about these investments.
1. The investment in bonds should be classified as:
Select one:
a. held-to-maturity securities
b. trading securities
c. significant influence securities
d. available-for-sale securities
2. The investment in Mark Company stock should be classified as:
Select one:
a. trading securities
b. available-for-sale securities
c. significant influence securities
d. held-to-maturity securities
3. The investment in Smith Company stock should be classified as:
Select one:
a. held-to-maturity securities
b. trading securities
c. available-for-sale securities
d. significant influence securities

2. Solution
Bonds are d. available-for-sale securities
Reason is that they were bought to help out other company rather than making money out of it.
Investment in Mark company is reffered to as d. held-to-maturity securities
Investment in Smith Company is reffered to as d. significant influence securities as these stocks
amount to 25%. Stock holing of 20 to 50% is refferef to as Significant influence securities.