Question

Aviation Inc. purchased securities on 1/1/2019 that would initially be accounted for in the financial statements as an investment held-to-maturity. Held to Maturity Securities: Cost 1/1/2019 Fair Market Value 12/31/2019 Bronx Co. Bonds $ 300,000 $ 278,000 At 12/31/2019, Aviation Inc. decided that they would sale the bond within 90 days. Assume that Aviation now has to adjust their financial statements and account for the investment as available for sale. Write a memo detailing the impact that the change will have on each financial statement and site and explain the accounting codification per www.fasb.org that explains how this change should be accounted for in the financial statements. You must show the journal entry that will be made to adjust the financials statements.  

Answer 1

At the end of each accounting year, investments held to maturity are reported on a balance sheet date at their amortized value. Any impairment loss is adjusted by amortization of discount or premium.

as there is no interest rat, we will just pass the final entry adjusting amortization.

on 31.03.2020

$ $

Maturity Bonds Dr 278000

Discount on Amortization Dr 22000

Cash 300000