Chapter A, Problem 1P

1.

To determine

Indicate the accounts that are effected in the books of the investor, by the purchase of bonds held-to-maturity on July 1.

2.

To determine

Indicate the accounts that are effected in the books of the investor, by the receipt of interest on December 31, from the investment in bonds held-to-maturity.

3.

To determine

Explain whether Corporation S should record the adjusting entries for changes in fair value (year-end) for the investment in bonds held-to-maturity.