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(Solved) : Stave Company Invests 10 000 000 5 Fixed Rate Corporate Bonds January 1 2017 Bonds Classif Q34223371

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Answer to Stave Company invests $10,000,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as …

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Stave Company invests $10,000,000 in 5% fixed rate corporatebonds on January 1, 2017. All the bonds are classified asavailable-for-sale and are purchased at par. At year-end, marketinterest rates have declined, and the fair value of the bonds isnow $10,600,000. Interest is paid on January 1. Prepare journalentries for Stave Company to (a) record the transactions related tothese bonds in 2017, assuming Stave does not elect the fair option;and (b) record the transactions related to these bonds in 2017,assuming that Stave Company elects the fair value option to accountfor these bonds.