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Outline the Debt Investment classifications based on valuation and approach to accounting.

Outline the Debt Investment classifications based on valuation and approach to accounting.

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Answer #1

Debt investments are classified into three categories:-

Held to maturity:- When the intention of holding the debt investments until they mature.

Held for trading:-When the intention is to sell within a short time.

Held for sale:- When investments are held for a period lesser than maturity but there is no intention to keep them for the purpose of trading.

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