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(a)
Sale of debt investment:Debt investments refer to the investments made in debts by the investor for which it lends funds to the borrowing company at a predetermined interest and the debt amount is repaid on the maturity date. For example, corporate bonds, government bonds, certificate of deposits.
Gain on sale of debt investments: If the sale proceeds from sale of debt investments exceed the cost price of the debt investments, there is a gain on sale of investments.
Loss on sale of debt investments: If the sale proceeds from sale of debt investments is less than the cost price of the debt investments, there is a loss on sale of investments.
To explain: the computation of gain or loss on sale of debt investments.
(b)
To explain: the presentation of gain or (loss) on sale of debts investments in the financial statements.
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Chapter AH Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
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