Presented below is information taken from a bond investment amortization schedule, with related fair values provided. These bonds are classified as FV-OCI.

Instructions
(a) Were the bonds purchased at a discount or at a premium?
(b) Prepare the adjusting entry to record the bonds at fair value at December 31, 2017. The fair value adjustment account has a debit balance of $1,000 prior to adjustment.
(c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2018.

Transcribed Image Text:

Amortized cost Fair value 12/31/17 $491,150 $497,000 12/31/18 $519,442 $509,000 12/31/19 $550,000 $550,000