Asked by Whian Bester on Jul 29, 2024
Verified
How is the premium or discount on held-to-maturity bond investments presented on the balance sheet?
A) as a part of the cost of the investment and amortized over a period not to exceed five years
B) as a part of the cost of the investment and amortized over the remaining life of the bonds
C) in a separate account that is reported separately from the bonds and amortized over the remaining life of the bonds
D) in a separate account that is reported separately from the investment account and not amortized
Bond Investments
Financial investments in debt securities issued by corporations or governments, which pay interest and are meant to be repaid at maturity.
Amortized
The gradual reduction of a debt over time by making regular payments that cover both principal and interest.
Held-To-Maturity
Held-to-maturity refers to investment securities that a company has the intent and ability to hold until a specified maturity date.
- Ascertain and administer the accounting strategies for premiums, discounts, and amortization applicable to bond investments.
Verified Answer
Learning Objectives
- Ascertain and administer the accounting strategies for premiums, discounts, and amortization applicable to bond investments.
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