When bonds that are held as a long-term investment are sold before their maturity dates, the difference between the sales price and the balance in the Investment account is

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When bonds are sold before their maturity, any difference between the sales price and the carrying value of the bonds (the balance in the Investment account) is recorded as a gain or loss on the sale. This gain or loss is reported on the income statement as a non-operating item, separate from the company's normal business activities.

When Bonds That Are Held as a Long-Term Investment Are