1. What are the criteria for classifying a security as trading? Available-for-sale? Held-to-maturity?
Subsequent Measurement:
2. If the company classifies the security as held-to-maturity but subsequently determines that it must be sold before it matures because the policyholder has died, can the security simply be re-classified from held-to-maturity into trading or available-for-sale?
3. What classification should the company use for this bond on its balance sheet at December 31, 2017?
4. Given your answer to part (3), how should the bond be valued on the Balance Sheet as of December 31, 2017? (At amortized cost? At fair value?)
5. How often does the company need to perform a reassessment of the appropriateness of the classification of its investments in debt and equity securities?