Using the amortization procedure for bonds, if an investor receives cash each period, it debits Cash and credits the Marketable Securities account.The result of this process is a new _____ (called the _____ for use in the computations during the next period. The bonds are classified as held to maturity.

Question

Quizplus · Accepted Answer

The process described refers to the amortization of a bond's carrying value or amortized cost. This amount represents the original cost of the bond adjusted for any amortization of discounts or premiums. The resulting carrying value is used in the computations for the next period. The other options are not relevant or accurate in this context - market value is not used in the amortization process for held to maturity bonds, and present value is used to calculate the initial price of the bond rather than its carrying value.

Using the Amortization Procedure for Bonds, If an Investor Receives