Question

Crick Co. purchased bonds at a premium on the open market as an investment and intends to hold these bonds to maturity. Crick should account for these bonds at:

A. Cost
B. Lower of cost or market
C. Fair value
D. Amortized cost

Answer 1

Crick Co. should account for the purchased bonds at amortized cost.

Step-by-step explanation:

When a company purchases bonds at a premium on the open market as an investment and intends to hold these bonds to maturity, they should account for these bonds at amortized cost. Amortized cost is the initial purchase price of the bonds adjusted for the premium or discount over the bond's lifetime.