Problem
Assume the same information as in Question 17 above except that the securities are classified as available-for-sale. The fair value of the bonds at December 31 of each year end is as follows.
2014: $430,000
2015: $425,000
2016: $420,000
(a) Prepare the journal entry at the date of the bond purchase.
(b) Prepare the journal entries to record the interest received and recognition of fair value for 2014.
(c) Prepare the journal entry to record the recognition of fair value for 2015.