On May 1, 2019, Orlan Company purchased a short-term $2,000,000 face value, 9% debt instruments for $1,860,000 including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2022, and pay interest semi-annually on January 1 and July 1. On December 31, 2019, the fair market value of the instruments is 98%. On March 2, 2020, Orlan Company sold the trading security for $1,980,000. How much will be recognized as gain (loss) on sale of trading security on 2020 income statement?
On May 1, 2019, Orlan Company purchased a short-term $2,000,000 face value, 9% debt instruments for $1,860,000 including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2022, and pay interest semi-annually on January 1 and July 1. On December 31, 2019, the fair market value of the instruments is 98%. On March 2, 2020, Orlan Company sold the trading security for $1,980,000. How much will be recognized as gain (loss) on sale of trading security on 2020 income statement?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On May 1, 2019, Orlan Company purchased a short-term $2,000,000 face value, 9% debt instruments for $1,860,000 including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2022, and pay interest semi-annually on January 1 and July 1. On December 31, 2019, the fair market value of the instruments is 98%. On March 2, 2020, Orlan Company sold the trading security for $1,980,000. How much will be recognized as gain (loss) on sale of trading security on 2020 income statement?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education