Mitchell Inc. issued 64, 10%, $1,000 bonds on January 1, 2020, for $70,006. Thebonds pay cash interest semiannually each June 30, and December 31, and wereissued to yield 8%. The bonds mature December 31, 2025, and the companyuses the effective interest method to amortize bond discounts or premiums. OnJanuary 1, 2020, Mitchell Inc. elects to account for the bonds using the fair valueoption. At December 31, 2020, the market rate on the bonds is 9%.Required:1. The carrying value of the bonds on December 31, 2020 is $2. The fair value of the bonds on December 31, 2020 is $3. The amount of unrealized holding gain or loss is $(Fill in the last blank with "gain" if there is an unrealized holdinggain or "loss" if there is an unrealized holding loss)Note: Don't round until the final answer. Round the final answer to the nearestdollar.

Given in the question: Number of bonds issued 64 Face Value per bond $1,000…

1. The carrying value of the bonds on December 31, 2020 is $ 2. The fair value of the bonds on December 31, 2020 is $ 3. The amount of unrealized holding gain or loss is $ (Fill in the last blank with "gain" if there is an unrealized holding gain or "loss" if there is an unrealized holding loss)

1. The carrying value of the bonds on December 31, 2020 is $ 2. The fair value of the bonds on December 31, 2020 is $ 3. The amount of unrealized holding gain or loss is $ (Fill in the last blank with "gain" if there is an unrealized holding gain or "loss" if there is an unrealized holding loss)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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