What are Held to Maturity Securities Explained

Held-to-maturity (HTM) securities Debt securities that a company has the intent and ability to hold until they mature. are debt securities a company intends and is able to hold until maturity. They are reported in current assets if their maturity dates are within one year or the operating cycle, whichever is longer. HTM securities are reported in long-term assets when the maturity dates extend beyond one year or the operating cycle, whichever is longer. All HTM securities are recorded at cost when purchased, and interest revenue is recorded when earned.

Point: Only debt securities can be classified as held-to-maturity; equity securities have no maturity date.

The portfolio of HTM securities is usually reported at (amortized) cost, which is explained in advanced courses. There is no fair value adjustment to the portfolio of HTM securities—neither to the short-term nor long-term portfolios. The basics of accounting for HTM securities were described earlier in this chapter.