2012 AICPA Released Far Question #36

Hi Guys, Can anyone clarify this question for me?

36. CPA

On January 1 of the current year, Barton Co. paid $900,000 to purchase two-year, 8%, $1,000,000 face

value bonds that were issued by another publicly-traded corporation. Barton plans to sell the bonds in the

first quarter of the following year. The fair value of the bonds at the end of the current year was

$1,020,000. At what amount should Barton report the bonds in its balance sheet at the end of the current

year?

a. $900,000

b. $950,000

c. $1,000,000

d. $1,020,000

Explanation

Choice “d” is correct.

First, I was thinking it is bond security so it must be held-to-maturity and valued at amortized cost. So i calculated it CV at year end at $950,000 and pick answer b. (wrong answer). The answer indicates it is valued at FV, maybe it should be classified as available for sale security? it is definitely not trading security because Barton Co plans to sell it next year which is more than one year (noncurrent)?

any thoughts?