Graffeo purchases a 10-year bond with a face value of $100,000 for a selling price of $98,000 on December 31, 2012. Graffeo uses the straight line method for amortization. As of December 31, 2013 and 2014, the fair market value of the bond is $103,000 and $99,000, respectively. Prepare the journal entries to adjust to fair market value at December 31, 2013 and 2014, assuming the security is classified as available-for-sale.

Please also explain why.