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

31.12.14

31.12.15

31.12.16

Amortized Cost

Tk. 610,150

570,442

550000

Fair Value

Tk. 416,000

561,000

550000

Required:

(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 Tk. 1,000 prior to adjustment.

(c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2016