Trading Securities
4. Decided to sell the bond earlier with different price.
First, Adjust trading securities to fair value. FV we did prior - ? <----- this will be the new FV ------------------- Amortized cost - how much they are selling it now Cash Discount/Premium on bond investments --Investment in bonds --Fair value adj.
Stated rate < Market Rate
Discount bond
3. Any additional adjustments needed journal entries are
Amortized cost = Acquired investment-( D/P on bond investment- interest revenue) Stated fair value of the bonds - amortized cost = Fair value adj Fair value adj ----Gain/Loss on investments(unrealized, NI)
2. Recording interest at effective market rate journal entries are
Cash --Discount/Premium on bond investment --Interest Revenue
1. Recording an investment journal entries are
Investment in bonds Discount/Premium on bond investment --------Cash
stated rate > market rate
Premium bond
Trading Securities are generally sold
within hours or days