Let's match each type of investment to its reporting method with clear definitions:
1. Investments in trading securities: These are typically bought and held primarily for the purpose of selling them in the short term. They are highly liquid and often traded on active markets. The appropriate reporting method for these securities is:
Answer: fair value method.
2. Investments in securities with significant influence: When an investor has a significant influence over the investee (generally marked by owning 20% to 50% of the voting stock), they are reported differently. The appropriate reporting method for these securities is:
Answer: equity method.
3. Investments in available-for-sale securities: These securities are not classified as trading or held-to-maturity. They are available for sale and can be sold in response to liquidity needs or changes in interest rates. The appropriate reporting method for these securities is:
Answer: fair value method.
4. Investments in held-to-maturity securities: These are debt securities that a company has the positive intent and ability to hold until maturity. The appropriate reporting method for these securities is:
Answer: amortized cost method.
Here is the filled table matching the types of investments with their respective methods:
\begin{tabular}{|l|c|c|}
\hline \multicolumn{2}{|c|}{ DEFINITION } & \multicolumn{1}{|c|}{ TERM } \\
\hline 1. Investments in trading securities are reported using the & fair value & method. \\
\hline 2. Investments in securities with significant influence are reported using the & equity & method. \\
\hline 3. Investments in available-for-sale securities are reported using the & fair value & method. \\
\hline 4. Investments in held-to-maturity securities are reported using the & amortized cost & method. \\
\hline
\end{tabular}
