Blossom Company purchased $1300000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1348896 at an effective interest rate of 7%. Using the effective interest method, Blossom Company decreased the Available-for-Sale Debt
Blossom Company purchased $1300000 of 8%, 5-year bonds from Carlin, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $1348896 at an effective interest rate of 7%. Using the effective interest method, Blossom Company decreased the Available-for-Sale Debt Securities account for the Carlin, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $5248 and $5392, respectively.
At February 1, 2022, Blossom Company sold the Carlin bonds for $1337000. After accruing for interest, the carrying value of the Carlin bonds on February 1, 2022 was $1340500. Assuming Blossom Company has a portfolio of available-for-sale debt investments, what should Blossom Company report as a gain (or loss) on the bonds?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
