What keeps up to maturity?

The value to the maturity is an accounting term that refers to a security that a company or individual does not intend to sell. On the other hand, the intention with such security is to stick to it until it reaches its expiry date when the investor collects the original investment along with the interest obtained. The most common type of security held to maturity is the bond. Such securities are classified for financial and revenue, specifically as this type of tool and are reported at amortized costs, which means that the one -time investment is affected for its lifetime. Unlike shares, bonds are usually purchased by investors to be held in maturity, which means they will never be sold. This type of investment usually represents a safe investor game, because bonds are often supported by powerful banks and usually come with interest guarantee. In general, investors must only wait for a period of maturity and then reap rewards.

While individuals are often forced to receive loans from the bank, bonds are the turn of this order. In the case of bonds, the investor actually lends its principal to the banking or financial institution, and the bank then repays this loan with interest. The amount of interest is usually determined by the bank at the beginning of the bond agreement. For example, a $ 1,000 bond (USD), which pays 10 % interest, would bring $ 100 to an investor $ 100 each year.

The amount of time when the bond is held to maturity is also determined when the investor buys a bond. When reporting a bond for income tax purposes, any increase or decline in the market value of the bond has no effect on the investor's tax burden. Instead, such a safety vehicle is reported every year at its amortized costs.

This makes the security that is held to maturity unique in the concept of accounting on the basis of intention. Contrast from trading with CENut papers such as stocks that can be purchased and sold at will. For income tax purposes, any changes in the value in stocks together with profits and losses from these changes must be reported. If the investment is not intended to be either held in maturity or actively traded, it is considered to be available for sale, which is the default category for investments that do not fall into any of the first two categories.