Final answer:
The claim that total assets increase when a company collects the face value of a bond investment at maturity is false. This exchange is simply a swap on the balance sheet, replacing the bond with an equivalent amount of cash without any change to the total assets of the company.
Step-by-step explanation:
When a company collects the face value of a bond investment at maturity, total assets do not increase. This statement is false because when the bond reaches maturity, the face value paid to the company merely replaces the bond asset on the balance sheet with cash - there is no increase in total assets.
The reason for this is that a bond is an IOU that represents a debt owed to the investor; it's part of the company's assets because it is due to be paid cash at a future date. At the time a bond is issued, an investor provides capital to the company, and in return, the company promises to pay back the face value on the maturity date, along with any agreed-upon interest or coupon payments.
Therefore, when the company pays back the face value at maturity, it is simply exchanging one asset (cash) for another asset (the bond), not increasing overall assets.