Reference no: EM132583468
Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale.
12/31/15 12/31/16 12/31/17
Amortized cost $185,500 $193,300 $200,000
Fair value $181,000 $196,000 $200,000
Required:
Question 1: Indicate, with a reason, whether the bonds were purchased at a discount or a premium.
Question 2: Prepare the adjusting entry to record the bonds at fair value at December 31, 2015. The Securities Fair Value Adjustment account has a debit balance of $4,000 prior to adjustment.
Question 3: Prepare adjusting entry to record the bonds at fair value at December 31, 2016.