Solved: On 1116 acme corp purchased 50000 of colossal corp bonds, Accounting Basics

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On 1116 acme corp purchased 50000 of colossal corp bonds

Question - On 1/1/16 Acme Corp. purchased $50,000 of Colossal Corp. Bonds. The bonds pay 9% interest yearly and have a remaining life of 10 years. Smith purchased the bonds at a price reflecting an 8% market rate. Smith uses the effective interest method. At the end of the year the bonds have a fair value of $54,000. Record any necessary 12/31/16 entry for the bond investment, which is classified as held to maturity. How would the bonds be classified on the Acme Corp. balance sheet?

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Accounting Basics: On 1116 acme corp purchased 50000 of colossal corp bonds

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