PART 1: a) Maddow and Wells, Inc. purchased equity securities in 2018. The management of the company has decided that the securities will not be sold immediately, but will be held for at least three years. This will allow MW to maximize the potential gains from holding the securities. The new accountant at the company wants to classify the securities as held-to-maturity because they will be held for three years; the company has never held securities for this long before. How would you advise the management of the company to classify the securities?
At the end of each reporting year, how will the securities be recognized on the company’s books? Support your response with an appropriate ASC reference (ASC xxx-xx-xx-x) or ASU (accounting standard update). Ideally, this part should not exceed one page. (75 points)
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