Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for sale.

                                       

Instructions
  (a) Indicate whether the bonds were purchased at a discount or at a premium.
  (b) Prepare the adjusting entry to record the bonds at fair value at December 31, 2014. The Fair Value Adjustment account has a debit balance of $1,000 prior to adjustment.
  (c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2015.