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

Question

Quizplus · Accepted Answer

When a company intends to hold securities to maturity and purchases them at a premium (in this case, $315,000 for bonds with a face value of $300,000), the entire purchase price, including the premium, is debited to Held-to-Maturity Securities. This reflects the actual cost of the investment.

Solo Co Purchased $300,000 of Bonds for $315,000