Question

The City of Sycamore has investments in bonds. These bonds have an amortized cost of $1,997,000. At year end, the financial press reports a market value of $2,002,600 for these bonds. The original cost of the bonds was $1,993,000. The par value at maturity will be $2,000,000. The amount at which the investments would be reported is:

Answer 1

The answer is: $2,002,600

Step-by-step explanation:

Government entities, like municipal governments, have to record all the bonds they hold at their fair market value. In case the government entity is not able to determine the fair market value of the bonds, they must record them at their amortized cost.