On January 1, Bucket Company purchased as an investment a $1,000, 7% bond for $760. Bucket plans to hold the bond for two years. The bond pays interest on January 1 and July 1. The entry to record the amortization of the bond on December 31 would include a:

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The bond was purchased at a discount ($760 instead of $1,000). The discount is amortized over the life of the bond. Since the bond pays interest semi-annually, the amortization for each period is calculated. The entry to record the amortization of the bond on December 31 would include a debit to Long-Term Investment in Bonds for $10, which represents the amortization of the discount for the period.

On January 1, Bucket Company Purchased as an Investment a $1,000