a company has a portfolio of financial assets that is classified as held to maturity 598088

Change of management

A company has a portfolio of financial assets that is classified as held-to-maturity. In the current period, at the direction of the board of directors, the senior management team has been replaced. The new management wishes to sell a portion of the held-to-maturity financial assets in order to carry out an expansion strategy designated and approved by the board.

Although the previous management team had been in place since the company”s formation and had never before undergone a major restructuring, the sale nevertheless calls into question the company”s intention to hold remaining held-to-maturity financial assets to maturity and the company may be prohibited from using the held-to-maturity classification if the amounts involved are not insignificant.