On February 18, 2018, Union Corporation purchased 10,000 shares of IBM bonds as a long-term investment for

Question:

On February 18, 2018, Union Corporation purchased 10,000 shares of IBM bonds as a long-term investment for $600,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2018, and December 31, 2019, the market value of the bonds was $580,000 and $610,000, respectively.

Required:

1. What is the appropriate reporting category for this investment? Why?

2. Prepare the adjusting entry for December 31, 2018.

3. Prepare the adjusting entry for December 31, 2019.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...