A government acquires as an investment a 30-year U.S. Treasury bond having aface value of $10,000. At the end of year 20, with 10 years remaining untilmaturity, the bond had a fair value of $10,200. Taking into account thediscount at which the government initially purchased the bond, its amortizedcost was $9,760. Assuming that it held the bond in a governmental fund, thegovernment should report the bond at a value of$0.$9.760.$10.000$10.200.

The government holds a 30-year U.S. Treasury bond with a face value of $10,000, which it purchased…

Answered: A government acquires as an investment…

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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On January 1, 2021, RANCY Company received ₱107,720 for a ₱100,000 face amount, 12% bond, a price that yields 10%. The bonds pay interest semi-annually. The entity elects the fair value option for valuing financial liabilities. On December 31, 2021, the fair value of the bond is determined to be ₱106,460. The entity recognized interest expense of ₱12,000 in the 2021 income statement. What was the gain or loss recognized in the income statement to report this bond at fair value? (IF gain, leave the numerical figure as is; if LOSS, put a negative (-) sign before the numerical figure)
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