Debt Investments) On January 1, 2018, Roosevelt Company purchased 12% bonds having a maturity value of $500,000 for $537,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2018, and mature January 1, 2023, with interest receivable December 31 of each year. The fair value of the bonds at December 31 of 2018 is $534,200 and 2019 is $515,000.

QUESTION 2 (Fair Value Option) Refer to the information in situation 1 of question 1 and assume that Roosevelt elected the fair value option for this held-for-collection investment. Instructions (a) Prepare any entries necessary at December 31, 2018, assuming the fair value of the bonds is $540,000. (b) Prepare any entries necessary at December 31, 2019, assuming the fair value of the bonds is $525,000.