Assume that on September 30, 20X3, Fiat, Inc., paid 97 for 6 1/2% bonds of Skoda Corporation as a longterm held-to-maturity investment. The maturity value of the bonds will be $20,000 on September 30, 20X8. The bonds pay interest on March 31 and September 30.
❙ Required
1. What method should Fiat use to account for its investment in the Skoda bonds? (pp. 551–552)
2. Using the straight-line method of amortizing the bonds, journalize all of Fiat’s transactions on the bonds for 20X3. (pp. 551–552)
3. Show how Fiat would report everything related to the bond investment on its balance sheet at December 31, 20X3. (p. 552)
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