2. As with other assets, the cost of a bond investment includes all costs related to the purchase.
3. If the bonds are purchased between interest dates, the purchase price includes accrued interest since the last interest payment.
4. When a bond is purchased for an investment, the purchase price, minus the brokerage commission, plus any accrued interest is recorded.
5. The amount of interest paid when buying a bond as an investment should be credited to Interest Revenue.
6. Most companies invest excess cash in bonds as investments in order to profit long-term from the growth of the investment.
7. To record a bond investment between interest payment periods, Investment in Bonds would be debited and Cash and Interest Revenue would be credited.
8. When long-term investments in bonds are sold before their maturity date, the seller deducts any accrued interest since the last interest payment date from the selling price.
9. If the proceeds from the sale of bond investments exceeds the carrying amount of the bonds, a gain is realized.
10. Any gains or losses on the sale of bonds normally would be reported in the Other Income (Loss) section of the income statement.