Watt Company purchased $300,000 of bonds for $315,000. If Watt intends to hold the securities to maturity, the entry to record the investment includes

Question

Quizplus · Accepted Answer

When purchasing bonds with the intention of holding them to maturity, the investment is recorded at cost, which in this case is $315,000. Therefore, the entry would include a debit to Held-to-Maturity Securities at $315,000. Neither premium nor discount on the investment is recorded under the held-to-maturity classification.

Watt Company Purchased $300,000 of Bonds for $315,000