Question

For several years Fister Links Products has held Microsoft bonds, considered by the company to be securities available-for-sale. The bonds were acquired at a cost of $530,000. At the end of 2021, their fair value was $646,000 and their amortized cost was $540,000. At the end of 2022, their fair value was $637,500 and their amortized cost was $550,000. At what amount will the investment be reported in the December 31, 2022, balance sheet

Answer 1

Investment would be shown at the Fair Value of $637,500

Step-by-step explanation:

The bonds are held for sale thus the Company measures the Bonds at Fair Value through Profit and Loss.

When it comes to Financial Assets, it is important to understand the model that is followed on the asset so as to measure the asset correctly.

Financial Assets held solely to collect Interest and Principle Amount are Subsequently measured at amortized cost whist Financial Assets held for trading or sale purposes are subsequently ,measured at Amortized cost.

The Investment would be shown at the Fair Value of $637,500 on December 31, 2022.