Question

You are analyzing a company and observe marketable securities worth $160,000 listed as current assets on the balance sheet. Which of the following statements is true?

A: Marketable securities were purchased for $160,000.

B: The securities are worth $160,000 as of the balance sheet date.

C:Marketable Securities are not current assets, they are long-term assets.

D: #1 and #2 could be correct depending on how the securities are classified.

Answer 1

Option A:	Marketable securities were purchased for $160,000. Marketable securities should be recorded at a fair value rather than cost value. Therefore, it is incorrect option.
Option B:	Marketable securities should be recorded at a fair value. Thus, it indicates the company have $160,000 worth of securities as of the balance sheet date. Therefore, it is correct option.
Option C:	Marketable securities are securities that intended to sell within one year. Thus, marketable securities is a current asset. Therefore, it is incorrect option.
Option D:	Marketable securities must be classified under the current assets. Therefore, it is incorrect option.