Carow Company purchased on January 1, 2018, as an available for sale (AFS) security, $57,000...
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Carow Company purchased on January 1, 2018, as an available for sale (AFS) security, $57,000 of the 10%, 5-year bonds of Chaster Corporation for $5000 which provides a 12% return. Which of the following statements FALSE / TRUE regarding the required journal entries for the above bonds if we consider them to be AFS securities as opposed to HTM securities?
1.
They report both types of securities at year-end at amortized cost.
2.
it uses the same journal entry to record the receipt of annual interest and discount amortization by Garfield.
3.
If assumed to be AFS securities, it will adjust the Chaster Bonds to fair value at year-end.
4.
It uses the same journal entry to record the purchase of the bonds by Garfield.
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