(Solution) - Kuban Company acquired 3 500 000 face value 8 bonds as -(2025 Original AI-Free Solution)

Paper Details

Kuban Company acquired $ 3,500,000 face value, 8% bonds as an available- for- sale investment on January 1 of the current year when the market rate of interest was 10%. Inter-est is paid annually each December 31. Kuban purchased the bonds, which mature in 12 years, for $ 3,023,042. Kuban amortizes the discount using the effective interest rate method. The fair value of the bonds at the end of the year is $ 3,000,000. Prepare the journal entries required on the date of acquisition and at the end of the first year after acquisition.