On January 1, 2023, Bramble Limited paid $478,737.60 for 12% bonds with a maturity value of $445,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Bramble applies ASPE using the effective interest method, and has a December 31 year end. Assume that Bramble hopes to make a gain on the bonds as interest rates are expected to fall. Bramble accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows:

On January 1, 2023, Bramble Limited paid $478,737.60 for 12% bonds with a maturity value of $445,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. Bramble applies ASPE using the effective interest method, and has a December 31 year end. Assume that Bramble hopes to make a gain on the bonds as interest rates are expected to fall. Bramble accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and reports interest income. The fair value of the bonds at December 31 of each year end is as follows:

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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