Multiple Choice
Pierce Company issued 11% bonds,dated January 1,with a face amount of $800,000 on January 1,2016.The bonds sold for $739,816 and mature in 2035 (20 years) .For bonds of similar risk and maturity the market yield was 12%.Interest is paid semiannually on June 30 and December 31.Pierce determines interest at the effective rate and elected the option to report these bonds at their fair value.On December 31,2016,the fair value of the bonds was $730,000.The entire change in fair value was due to a change in the general (risk-free) rate of interest.Pierce's net income for the year will include:
A) An unrealized gain from change in the fair value of debt of $10,617.
B) An unrealized loss from change in the fair value of debt of $10,617.
C) A gain from change in the fair value of debt of $10,204.
D) A loss from change in the fair value of debt of $10,204.
Correct Answer:
Verified
Correct Answer:
Verified
Q1: Cramer Company sold five-year,8% bonds on October
Q4: On January 1,2016,Ozark Minerals issued $10 million
Q7: Listed below are 4 terms followed by
Q10: Required: What amount of interest expense on
Q44: The book value of zero-coupon bonds increases
Q134: What is the stated annual rate of
Q136: Bonds were issued at a discount. In
Q166: A bond issue with a face amount
Q209: Eagle Company issued 10-year bonds at 96
Q217: When bonds are sold at a premium,