Pharoah Company purchased $3200000 of 9%, 5-year bonds from Wildhorse, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $3320740 at an effective interest rate of 8%. Using the effective-interest method, Pharoah Company decreased the Available-for-Sale Debt Securities account for the Wildhorse, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $11020 and $11380, respectively. At April 1, 2022, Pharoah Company sold the Wildhorse bonds for $3290000. After accruing for interest, the carrying value of the Wildhorse bonds on April 1, 2022 was $3297440. Assuming Pharoah Company has a portfolio of Available-for-Sale Debt Securities, what should Pharoah Company report as a gain or loss on the bonds?
Pharoah Company purchased $3200000 of 9%, 5-year bonds from Wildhorse, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $3320740 at an effective interest rate of 8%. Using the effective-interest method, Pharoah Company decreased the Available-for-Sale Debt Securities account for the Wildhorse, Inc. bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $11020 and $11380, respectively.
At April 1, 2022, Pharoah Company sold the Wildhorse bonds for $3290000. After accruing for interest, the carrying value of the Wildhorse bonds on April 1, 2022 was $3297440. Assuming Pharoah Company has a portfolio of Available-for-Sale Debt Securities, what should Pharoah Company report as a gain or loss on the bonds?
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