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Quiz_15 - Acct-101 Quiz 15 A long-term investment in debt...

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Acct-101 Quiz 15 A long-term investment in debt securities is carried at cost lower of cost or market equity market The amortization of discount on bonds purchased as a long-term investment decreases the amount of interest expense increases the amount of the investment account decreases the amount of the investment account increases the amount of interest expense On June 1, $400,000 of bonds were purchased as a long-term investment at 101.5 and $500 was paid as the brokerage commission. If the bonds bear interest at 12%, which is paid semiannually on January 1 and July 1, what is the total cost to be debited to the investment account? $400,000 $406,500 $405,500 $402,000 The account Investment in Bonds is reported at cost as a long-term liability along with the current portion reported as a current liability at cost as a long-term asset less Discount on Bond Investments or plus Premium on Bond Investments at cost as a long-term asset at fair market value because that is all that is required
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