Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

Question

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The semiannual interest payment amount for Eider's 8% five-year bonds payable at par value is $12,000 ($300,000 x 8% x 6/12). Therefore, choice D is incorrect as it states the semiannual interest payment amount is $24,000. The securities are recorded at cost ($300,000) and will have a maturity value of $300,000. When an interest payment is received, Interest Revenue should be credited.

Seamark Buys $300,000 of Eider's 8% Five-Year Bonds Payable at Par